How to Attract Investors via Equity Crowdfunding

Understanding Angel Investors of Equity Crowdfundingattract investors

Equity crowdfunding investors are not like other crowdfunding contributors. They are not looking to support a particular item or to get a physical trinket for their support. Investors who you want to attract via equity crowdfunding are interested in long-term rewards, innovation, and growth. Attracting these investors should not mirror the other types of crowdfunding available. The goal is to attract serious investors in a non-traditional, high risk form of investment, also known as your start-up. Of course, the greater the risk, the greater the reward. In order to attract these investors, the issuer must let potential investors see the clarity and strength of the investment and future enterprise.

Have you demonstrated projected growth, progress, and planning? Surely you have completed the due diligence and created a business plan (we hope). Take your business plan and give it to someone. This someone can be anyone: a waiter, a friend, someone on a park bench. Let them read it. Don’t ask if they liked it. Don’t ask if they would invest. Ask if it made sense to them. Equity crowdfunding uses social media heavily and your equity offering should have the potential to attract anyone who has access to the internet. You have to be ready for a wide variety of people to understand your model, plan, and energy to attract investors. You can address any questions raised with a sentence (two at the most). This will add clarity to your information and help garner investor’s interest.

Brevity to Attract Investors via Equity Crowdfunding

Brevity is the soul of wit. You want to grab investor attention and do it quickly. Consider Twitter – it has a pretty short-word count limit, but it is a very effective tool for social networking and entrepreneurial marketing. Social media is one of the mainstays of equity crowdfunding. Practice writing “tweets”; Decide on a word limit and try to write concise statements that fit within your new parameter. It may be tempting to memorize a glorious speech, or write a lengthy tome including every fantastic sparkling fact about your enterprise. After about the fifth point, you’re going to lose people unless you have a concise and well organized plan to release information.

Let’s look at a quick example.

I intend to create a new business called Integrajournal that will establish a rating force within existing media. Many media outlets are focused on being the first to offer the news and yet the level of verification has gone down. No one cares if it is accurate so long as it is first. I intend to create a company consisting of award-winning freelance journalists who come together to verify and fact check many media outlets including newspapers and their conglomerates. This company also will look at foreign newspapers. The information produced by this will be accurate and unbiased, unlike much of the media presented today. Using the SPC (Society of Professional Journalists) code of ethics to create a rating system, much like the Better Business Bureau does for businesses. There is a large market for accurate news and people will come to us in order to get it.

This is very lengthy. An investor may not read much past the first three sentences, particularly if they are just browsing social media. It discusses very much about why the company will be doing what they do and what they will be doing. The how is not as clear. What is the return for this? Even if the idea is interesting, the information is lacking essential support that an investor would need. Through equity crowdfunding sites, investors are able to contact an (or more) issuer(s) to get any information they need. The goal, though, would be to have enough information present to motivate them to ask for more information. When they come to you with questions, it should be specific questions to their need as an investor. You want to get investor attention, not create investor boredom or confusion. Lets take a look at a revised blurb for this company.

Integrajournal is a start-up corporation of award winning journalists who intend to use the SPC (Society of Professional Journalists) code of ethics to review and rate news organizations’ accuracy in reporting on both the national and international level.

In this short statement we essentially condensed the necessary information from the first communication. The investor can decide whether or not this might interest them and whether this is something that they feel will provide a good return. Now, are there details missing? Yes, of course. A serious investor would need to review your additional information and you can release it, bit by bit through small clear communications such as this. In fact, truCrowd (our funding platform) has a Twitter-like capability that lets investors satisfy their curiosity by conversing (Twitter style) among themselves and with the issuer. This could fit into a tweet or be a great tag line for a Facebook page, and it is more concise that the previous entry. Consider the amount of communication that you will have with your investors. A series of short clear statements and evidence of need and growth could be a great way to keep them engaged and interested.

There is another strength to brevity.  Attracting investors is much easier when there is a small informative bite that is easy to pass on to others. It is easier to link up and connect with more investors, easier to share when it’s quick and clear. Equity crowdfunding utilizes social media in an innovative way. With this method, you have the opportunity to “talk less and say more” and that will help find and attract investors in droves (we hope).  The shorter the phrase, the easier it is to recall and to pass on in conversation. After all, to have a successful business you still need people talking. A short exciting statement can get investors to spread the word.

Equity crowdfunding investors are looking to invest in a competent idea that already demonstrates signs of execution, growth, and strength. As an issuer, you want to keep your investor with you for the long term, and therefore a communication plan is essential. Utilizing social media tools provided by the crowdfunding site and an extra pair of eyes can help to get your idea out to more people through equity crowdfunding. In order to attract and keep investor attention, the plan has to be clear, concise, and direct. We think this is a skill that the issuer (entrepreneur) looking to raise funds via equity crowdfunding has to have in his team.

What do you think? Are we looking in a biased way to this matter? Please comment below and let’s keep the conversation going.

Posted in Capital Formation, Equity Crowdfunding, Investors, Start-ups

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