Anticipate the Distinctive Needs of Your Crowdfunding Investors
For the past 80 years, only accredited investors – people that have a net worth of over $1 million or an annual income of over $200,000 per year – have had the right to invest in startups. Thanks to recent changes in legislation, 2014 opens the investment gates to unaccredited investors – practically anyone. This distinguishes an entirely different category of investors, a group that only has one thing in common with traditional investing entities: the willingness to fund a startup. Their expectations, just like your startup, are brand new. Find out how to anticipate your investors’ needs.
Understand the Uniqueness of Your Crowd
A non-accredited investment crowd may not be educationally prepared to handle the challenges and stresses of funding an emerging business. The average stockholder invests with one major goal in mind, making profit, whereas the crowdfunding investor pitches in for a smaller stake but a bigger involvement. Their role goes beyond waiting and seeing what happens to the business they helped fund – it involves actively participating in helping it grow and succeed. Crowdfunding offers the unique opportunity to establish ongoing communication with you, the owner (and implicitly, his investment) and to be proactive about marketing your company’s products and/or services. When anticipating your investors’ needs, always keep in mind that your crowd members have a sense of partnership in your business.
Establish Outbound Communication
Until you set up a flowing communication pace with your investors and get the rhythm going, you may wonder what information is relevant enough to be revealed and what you should keep behind closed doors. Outbound communication means anticipating your investors’ expectations and reaching out to them before they reach out to you. Investors appreciate hearing the good news, as well as the bad, as long as they get a clear picture of what’s going on and how you plan to address the issues at hand. As a business owner, you are expected to define a time frame for letting your investors know what’s happening with the company they funded. You make the rules. Inform them upfront how often you plan on sharing the news with your crowd and then act accordingly.
Update Efficiently and Time-Effectively
Using your capital resourcefully to carry out the company’s business plan is a sure way but not the only way to keep your investors happy.The crowd members are most likely planning to be consumers of your company’s products and/or services. They want to see their money put into use, hit milestones and start making profit. Thus, they may (and will) flood you with questions even if you have already established outbound communication with them. As overwhelming as this may seem, you can easily address most of your investors’ needs by creating an efficient system, such as categorizing their top five concerns in a spreadsheet. This will give you the chance to respond to a general issue covering more than one arising question. Keep the report simple and concise, bullet the main points and remember to thank your investors at the end of each update (yes, even the nagging ones, too).
Keeping your investors happy can be challenging if you don’t have a plan for keeping them engaged long after they’ve funded your business. Business literature often associates company financing with dating or getting married. Your startup “marries” its crowdfunding investors into a mutual support relationship. Needless to say, honesty and transparency should always stand at the base of your reports to the crowd. Understand that your investors are unique, always be the first to initiate communication and keep them posted in a consistent manner. This will ensure their continuous support for reaching your company’s goals. A happy investor is a long-term investor.
Thanks for being awesome and speaking your mind in the box below.