This is a guest blog post by Nathan Rose. Nathan is the bestselling author of Equity Crowdfunding: The Complete Guide For Startups & Growing Companies. He has appeared at crowdfunding events around the globe, including in Toronto, Amsterdam, London and Paris, and has spent time as an Expert in Residence at CrowdfundingHub. Today, he is focused on helping startups from all over the world use equity crowdfunding to gain marketing exposure and raise money at the same time.
Many startups try to go out to raise investment money from the crowd before they have actually built their crowd. But to be successful, would-be-crowdfunders should do things in exactly the opposite order. Crowdbuilding needs to come first, as the essential precursor to equity crowdfunding. Investors more willingly invest in people and companies that they know, like and trust. So, the crowdfunding mindset is about building a meaningful relationship with them well in advance of actually needing to ask them for money.
But how can a startup get started with crowdbuilding? In this article, I will lay out a simple 5-step process to build your crowd towards fever pitch in advance of fundraising.
1. Identify Your Crowd With An Investor Avatar
The first part of crowdbuilding is a deep knowledge of “who is your crowd”? The answer to this question cannot be “everyone” - you need to get granular. You may have done a similar exercise already when designing your product or service. It involves identifying who your target customer is. Similarly, getting to know your target investor is all about knowing their demographics. This may include their:
A word of warning: your investor avatar could very well be different from your customer avatar. Customers are great, of course – every business needs customers! But the customer/provider relationship is merely transactional. They’ll buy what you’re selling, but if a better offer comes along, they’ll quickly make the switch away. You’re looking for people who love you so much that they’ll back you with their hard-earned money.
There might be some overlap between the type of person that invests in your company, and who makes up your customer base. But not all of your customers will invest, and there could well be some investors who are not customers. This distinction becomes crucial when developing your outreach efforts. For example, if you figure that your customers are between age 25 – 45, but you estimate that your investors are going to be aged between 40 – 60, it will be more effective if you develop a marketing message which appeals more specifically to that older audience.
2. Find Where They Are
There will be certain places where this investor avatar is found. Come up with ideas in a brainstorming session:
All of this information can be used as targets for your crowdbuilding outreach.
Go beyond the online realm. Equity crowdfunding isn’t a computer game to be conducted entirely from behind your screen. Your investor avatar are real people, so go out there and make real connections with them in the real world. Investors are far more likely to invest in company founders that they have met in person. They are also more likely to invest larger amounts of money.
3. Gain Their Attention
Once you know what your ideal crowd looks like, the next stage is to go out and show up where they are, and gain their attention.
Ultimately, equity crowdfunding is an exercise in marketing. If you are shy about self-promotion and getting your name out there, you might as well give up now. You are going to be required to do a lot of outreach and follow up to make this method of fundraising work. But the rewards are immense for those who do it right.
The specific steps to gain the attention of your loyal-followers-in-waiting are different in every case.
This exercise will be much more effective when you have first taken the time to figure out who your ideal crowd is. This way, you will be telling them about something they are already likely to be interested in, rather then “selling” them an investment they do not actually want.
4. Give Value & Build Trust Over Time
Appearing on your crowd’s radar from time to time, well in advance of equity crowdfunding, allows your crowd to build their familiarity with your company gradually. As mentioned earlier, people invest in companies that they know, like and trust. Email is a good way to do this, at scale. If your e-mails are a welcome presence in their day, then your crowd gets to know you such that by the time you make the “big ask” (to invest in your company), they already know what you're all about.
Treating people well will help to grow your crowd. People tend to cluster around others who are like themselves. Get one member of your investor avatar on your list, and they might introduce you to 10 more just like them if they grow to like you and your story. The strongest endorsement your company can get is word of mouth.
Be easy to contact. When someone in your crowd emails you, take the time to reply. When someone in your crowd calls you, take the time to answer. This kind of authenticity takes time, but it works amazingly well in building that all-important trust.
5. Co-Create Your Campaign
“Co-creation” is a strategy which many in the startup world are already familiar with.
Crowdfunding co-creation is about bringing companies and their crowd together to create a better campaign, and a better company. When the crowd gets a seat at the table, they give their feedback on what they want to see, rather than the creator trying to guess. It reverses the order of creation - instead of a creator making a thing, and then trying to figure out how to sell it, the philosophy of co-creation first asks the crowd what they want, before the creator goes away and makes it for them.
The point of crowdfunding co-creation is not only to make a better campaign, but to also make people feel like it belongs to them. In exceptional cases, the campaign's success can even become part of their identity. That's the ultimate way to make someone know, like, and trust you.
Remember that behind every investment dollar is a real person. Talk to them on that level, and you’ll succeed with crowdbuilding. Then, when it comes time for equity crowdfunding, you’ll already have an army loyal followers on your side.
If you liked this article and want a full equity crowdfunding walk-through, including information about equity crowdfunding pros and cons, platform selection, forming an amazing investment pitch, and what to do at every stage of your campaign, sign up to the video training, by clicking this link -> The Free Equity Crowdfunding Training.
Nathan Rose is the bestselling author of Equity Crowdfunding: The Complete Guide For Startups & Growing Companies . He has appeared at crowdfunding events around the globe, including in Toronto, Amsterdam, London and Paris, and has spent time as an Expert in Residence at CrowdfundingHub. Today, he runs the website www.startupfundingsecrets.io, as a way of helping startups from all over the world use equity crowdfunding to gain marketing exposure and raise money at the same time.
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