Rules for Regulation A+ went into effect in mid-2015, effectively legalizing equity crowdfunding for accredited and non-accredited investors alike. In addition to taking away restrictions on general solicitation and advertising, non-accredited investor …
Rules for Regulation A+ went into effect in mid-2015, effectively legalizing equity crowdfunding for accredited and non-accredited investors alike. In addition to taking away restrictions on general solicitation and advertising, non-accredited investors can now invest up to 10% of their income or net worth annually, whichever is greater.
With a wider pool of potential investors and limited restrictions on solicitation, marketing your offering becomes easier, but also more important. Read on for some of our top tips for marketing your equity crowdfunding campaign.
Marketing Tips for a Successful Equity Crowdfunding Campaign
Don’t underestimate the importance of pre-launch. The pre-launch phase is critical to any crowdfunding campaign, whether it’s rewards-based or equity. Never launch until you’re ready. This period of time is important for two reasons: to prepare your business for the offering, and to gather leads, or people interested in purchasing your products or services. On the business side of things, you’ll need a solid business plan, including hard numbers. Consider hiring an accountant and an attorney to pull together all the statements and legal documents necessary for the offering.
Start growing your networks. During pre-launch, you’ll also need to work on growing your networks – both personal networks and social networks. Again, this is the time to tell everyone you know about your project. Your goal here is to build a group of people interested in your company’s success, in hopes that they eventually will want to become investors.
Choose your platform wisely. Picking the right platform for your project is critical. Consider the following:
- Think of your ideal investor – what platforms are these people on?
- How do you want to negotiate with investors? Do you want to set the terms, or do you want a lead investor to negotiate terms and invest so that the crowd can invest under them? If you’re interested in an investor-led campaign, consider platforms such as AngelList.
- Do you want to be on a platform that fits into a certain niche? For example, if you’re looking to raise capital through real estate crowdfunding, you may be interested in a real estate crowdfunding platform, such as Patch of Land or Realty Mogul.
Create an engaging video. Crowdfunding projects, whether rewards or equity, need compelling videos to be successful. Think of the video as your elevator pitch. Your goal when creating your crowdfunding video should be to explain your product and make an investor want to join you. However, similar to an elevator pitch, it needs to be short – we find that two to three minutes tends to be the sweet spot. Introduce the business and the team behind it, and tell investors why they should get on board with you, but keep it engaging. If your video is uninteresting or too long, you’ll start to lose viewers.
Include traditional marketing and PR. Your goal with traditional marketing and PR should be to make it easy for investors to find you. While being on the right platform for your project is a big piece of this, that’s not to say that public relations and more traditional marketing isn’t important. Hire a public relations expert to help you gain media coverage and take charge of investor relations. Do everything you can to get your company out there. Distribute press releases, and pitch journalists. Getting coverage for your project builds credibility and social proof, making others more likely to invest in your campaign.
An Important Note About Communicating Your Offering
Before you file Form C with the SEC, you cannot make any “offers” of securities, either publicly or privately. This means:
- No meeting with potential investors.
- No sneak peaks or first looks at your offering.
- No public announcements about your offering.
- No discussions of your offering at any event.
- No other public communications about the offering.
- No conditioning the market (for example, suddenly ramping up advertising).
Conversations with friends and family about your offering are permitted, but you cannot be pitching them as investors.
Even after you file Form C with the SEC, communication about the offering is still heavily regulated. We always recommend that those looking to run an equity crowdfunding campaign consult with an attorney throughout the process.
To learn more about how Enventys Partners can help you market your equity crowdfunding project, get in touch and request a quote.
Note: This page is intended to provide legal information. It is not legal advice and should not be taken as such. If you have specific questions about a legal matter, please contact your attorney.