Equity Crowdfunding Campaign Mistakes That Drive Investors Away
There has been a lot of discussion on the most well-guarded secrets and efficient practices to drive a crowdfunding campaign to success. In spite of all these pertinent suggestions, 56% of crowdfunding projects fail to meet their goals. One of the causative factors to these failures involves a lack of tools to support novices – a deficiency which leads to crowdfund investing campaign mistakes. Numerous campaigns start off on the right foot, seem to be running smoothly, but develop less obvious STOP signals that catch the eye of the potential investors. These subtle mistakes ultimately cost the entrepreneurs time and money. To avoid turning off potential funders, make sure you don’t fall into one of the following common traps:
1. Making a “Too Good to Be True” First Impression – Non-accredited investors will step into equity crowdfunding prepared to do their homework. Considering all the crowdfunding theory that will flow in their direction, nothing will speak more clearly than the experience of their wealthier counterparts – accredited investors. Thousands of crowdfunded companies have reached their campaign target amounts only to fail in meeting their milestones – thus setting their investors up for disappointment. The ability to actually deliver the promises made in an equity crowdfunding campaign is one of the first things an investor will assess before parting with their money. To avoid this common crowdfund investing campaign mistake, truCrowd advises issuers to set scalable expectations (yes, even if they don’t change the world).
2. Creating a Highly Professional yet Impersonal Brand – You may have the most innovative business idea, the coolest company profile, a thousand followers on Twitter and a complete issuer documentation brief, but if you don’t add your personal touch to your campaign your investors won’t know what to relate to. A highly common crowdfund investing campaign mistake is the absence of a meaningful brand identity. Take advantage of any given tools to “humanize” your profile. Let the investors know who you are, get actual user testimonials, provide proofs of the difference your company will make in the industry and give a name to your crowdfunding campaign face. Befriending your investors now and your customers in the future is the factor that will differentiate your business from the competition.
3. Trying to Solve Too Many Problems – The multitude of issues your startup wants to address is not proportionate to the amount of investors the “Superman” costume will gain you. In fact, this costume may even cost you a few backers as your main objective can be overshadowed by several other functions your business aims to fulfil. Equity crowdfunding investors will support businesses that address one or two industry deficiencies and will avoid supporting campaigns with extensive “to-do” lists. In addition to being clear about your objective, you have to master the ability to be concise – explain your company’s core value proposition in a few words and not make the investors feel they’re wasting their time. The key to monetizing your campaign’s strengths is getting future customers to understand exactly what problem you plan to solve and how you plan to solve it.
Crowdfund investors are not only in the game for potential ROI – many of them know it could take years before they see a return. In fact, a majority of them are aware that they may never gain any substantial profits out of your business.Therefore, they have a distinctive campaign analyzing agenda when compared to angel investors and venture capitalists. Avoiding these common crowdfund investing campaign mistakes means making sure that your investors know who you are, what your company can do and the one thing it definitely will do.
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