We had the chance to sit down with a few crowdfunding experts in our network to better understand their experiences, tips, and tricks that have landed numerous companies where they are today.
Below, we will share some knowledge from Eric Cox, Head of Growth at Netcapital, and Jonny Price, VP of Funding at Wefunder.
Be sure to watch Eric Cox and Jonny Price’s full videos here, but we summarized a few of the top tips and learnings below.
Eric Cox:
There are many advantages of crowdfunding, notably you do not have to give up control.
For those looking to get into CF – make sure that you only invest what you’re comfortable potentially losing.
Investing is an incredibly relational experience and there’s a lot of sentiment involved in it.
Take the extra time to build relationships along the way.
It takes a ton of work both online and offline to raise capital.
The potential of crowdfunding is to have a customer, investor and an influencer, all in the same package. That’s the best of all worlds.
Crowdfunding will increasingly impact consumer spending habits over time.
Crowdfunding allows you to access the capital as it comes in, as you’re going to release the funds from escrow and continue to raise while still showing the max earned. It is a great way to build potential investor excitement.
Founders must pay attention to equity all the time.
Be all in. Crowdfunding models have made it a lot easier, but it is still a challenge. You have to work at it. There’s no getting around that.
The most successful founders are scrappy and coachable.
Think of crowdfunding platforms as an intermediary. You should come with the plan with some of your own money lined up, and we will help elevate that.
It is strategic to be thoughtful and intentful while in that initial push, first impressions are everything.
There are no guarantees anyone is going to write a check or really move mountains for you. But don’t overlook the power of feedback and support – our network loves to review deals and guide folks.
Jonny Price:
With new laws around regulation crowdfunding, you can do two pretty interesting things. Firstly, you can raise from unaccredited as well as accredited investors, and then secondly, you can publicly promote the offering.
Leverage your network! If you raise a friends and family round, you raise an angel round from angels, you raise a community round from your community.
This model is so powerful because it allows customers to become a passionate evangelist for your brand. They’re not going to churn. They’re going to have a higher LTV, high share of wallet on your startup, your product.
If your customers are startups, then I think that is just the absolute sweet spot because startup founders are really interested in this kind of thing.
Get some traction. Get your community involved. Get them to know about your product and keep building. And at some point you have enough of them.
Fundraising is hard. It’s often a full time job of the founder for multiple months. It’s like maybe hundreds of meetings, hundreds of no’s.
Typically our investors bring about a third of the round. If you as a founder can bring half a million from your own outreach and promotion marketing, then you might expect our investors to bring $250K and that’s $250K that you wouldn’t have received without the platform.
Treat investors like a CRM. You have a target list and then you populate it and manage that funnel. So it takes work to make it work.
A lot of the principles of Web3 right around kind of community ownership and stakeholder engagement I think are very relevant for this concept of community around this.
If we can democratize the decision makers, we can let anyone be an angel investor, then hopefully we can level the playing field a little bit and get more capital flowing.
Financial transparency is a must to be successful.
It’s not just existing community engagement, right, but it’s also new customer acquisition.
Having a lead investor who has a lot of credibility in their network and is investing a decent amount is the perfect signal that other investors can look at and kind of get behind.
Ad spend should be thought about thoroughly versus immediately activated – if the return is high enough to save the founder’s time, do it. If not, preserve your capital.
Create and organize your legal documents now and prepare yourself so you can scale out as you grow.
And these are just the tip of the iceberg! Learn more from the experts by tuning into our Startup Series and read up on our blog content where we dive deeper into related topics.
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