Attracting investors for an equity crowdfunding campaign essentially boils down to proof of credibility. Project creators and entrepreneurs must have a detailed business plan to present to potential investors. They should also validate their startup with proof of concept. When courting potential investors, it is important to provide frequent communication, as investor relations is critical.
However, all of this pertains to attracting investors who are already interested in the project; how can entrepreneurs find these investors in the first place?
Below we examine three tips for finding investors for an equity crowdfunding campaign:
1. Identify the ideal investor.
First, creators must identify the investors they hope to bring onto the project. Consider the following:
- Do you want accredited investors only, or are you interested in non-accredited investors as well?
- What stage of funding is the project? Some investors are only interested in investing at certain stages, while others are open to any stage.
- How much equity are you willing to give up? Once you find investors, you will still need to negotiate the investment. It’s important to know ahead of time how much you are willing to give investors.
Thinking through these questions and more provides insight into who the ideal investor is.
When considering your investors, you’ll also want to research your ideal audience demographics beyond just the financial details. Different people will be interested in investing in a health startup versus a tech startup. While it’s likely that people will factor in the monetary benefits of investing over how passionate they are about a startup or product, it’s always a good idea to target people who are within your target customer base – especially if you’re running a campaign that accepts non-accredited investors.
2. Pick a platform.
After identifying the investors a startup is interested in, along with the investors who may be interested in equity in the startup, picking a platform becomes simpler. Despite this, there is still much to consider.
For example, how does the startup want to negotiate with investors? With entrepreneur-led platforms, the entrepreneurs set the terms, including price and the amount of equity given away. On investor-led platforms, a lead investor negotiates terms for investors and invests their own money, and then the crowd can invest under those terms.
Consider other factors as well, such as whether a platform that fits into a certain niche or market would be ideal. For example, an entrepreneur looking to raise capital through real estate crowdfunding may be best served by a real estate crowdfunding platform, such as Patch of Land.
Entrepreneurs must be thoughtful when choosing a platform. Look into all possible platforms and choose the one that best suits the startup and it’s potential investors.
3. Make it easy for investors to find the project.
Even though going after potential investors is an essential piece of a successful equity crowdfunding campaign, it’s still important for potential investors to be able to find the project.
Again, choosing the right platform is a big piece of this. However, there are still opportunities to put the project in front of potential investors. Entrepreneurs need to be sure that people who would be interested in the startup can find it. For this reason, pitching the startup frequently is important. Have a high-quality pitch deck ready to go, and look for opportunities to pitch the project often. Bring notable stakeholders on board and use them as social proof of the team behind the project.
When making the project easy to find, investors should also consider traditional marketing and PR tactics. While the largest investors aren’t reached in the same way as rewards crowdfunding, there is still much to be gained from employing these types of strategies.
For more information about finding investors for equity crowdfunding, get in touch today.