Getting the timing right - are you ready to crowdfund your startup?
Chances are, you think you're ready to crowfund. And, you’ve already decided crowdfunding is the best way to get the money you need to take your business to the next level. But before you commit yourself to a date to launch your fundraising campaign, check if you're really ready to crowdfund? Consider the following five questions:
1. Can you set out the opportunity for potential investors?
If your campaign goes live on Seedrs, could you:
● Explain the opportunity – have two versions ready: an elevator pitch that articulates in a couple of sentences why people should invest in your business, and a longer story.
● Describe your business successes to date – this could be anything from winning awards, gaining some investment/backing, being accepted into an incubator/accelerator, hiring new team members, opening an office or being featured in the press.
● Explain your performance goals.
● Introduce your team – having a strong and ambitious team behind you shows potential investors that there are people working hard to make this, and in turn their investment, a success.
2. Is it easy to explain what the money will be used for?
Have to hand plenty of quotes explaining what you intend to get done with the money. Add a contingency amount for each item on the list. And, don’t forget to allow for your crowdfunding platforms costs. Investors are likely to scrutinise your figures, so don’t just work with rough ‘guestimates’, if you can you should try to use solid figures as much as possible. Scaling and growing are everyone’s wish for their startup, and though these are credible answers for what you hope to do, these aren’t answers for what you’re doing with the money. Something specific such as hiring certain new team members, spending £X on marketing or £X on tech and product teams to launch a new innovation.
3. Can you tap into your network?
You shouldn’t just rely on a crowdfunding platform and its investor base to get you to your target figure. It’s better to validate the opportunity you’re offering by getting a few investors or your community on-board first. Try reaching out to:
● Previous investors in your business.
● Any high net worth contacts you may have.
● Your customers.
● Friends and family.
4. Will you be able to quickly make adhoc updates?
Be ready to make adhoc updates to showcase all that the business is doing during the raise, for example any press coverage achieved or if the founders are speaking at any events. Think about what may come up and how you might phrase it. Send out Tweets and emails
as you introduce new product lines, win awards or hire people.
5. Did you know that it’s all or nothing?
On most platforms (including Seedrs), if you don’t reach your target, all the money raised goes straight back to the investors. And, you simply don’t get funded. So, be sure to have a:
● Realistic target in mind that will get you to at least the next level – you don’t want to overshoot and ask for to much but at the same time you need to be realistic about what you need to keep pushing forwards to the next level so it’s important not to ask for too little either.
● Robust marketing plan in place to push the raise – a crowdfunding round should be all encompassing. Every channel both you and your startup has, such as the app, website, and its social media, should be drumming home the message that you are crowdfunding and they could join the journey with you.
● Potenitally have a ‘gap’ funder in place that would be prepared to put in the money needed to reach the target if it looks like you wouldn’t otherwise make it.