No Crowdfunding Secrets Here – Just Working Advice
After Texas equity crowdfunding sailed through a unanimous 4-0 vote last week, Texans will have access to live intrastate crowdfunding campaigns by late November. The Lone Star State may not be the first state to enact their own intrastate crowdfunding, but they are the biggest so far and that means big money. Texas entrepreneurs should be jumping for joy because the next era of fundraising is now a reality for you – that is, if you are prepared. It is true you can post an equity crowdfunding offering with no preparation at all, but your odds of reaching your funding goal are slim to none. Remember: on most platforms, if you don’t reach 100% of your funding target, you don’t get a dime.
With that said I think it’s time to offer some entrepreneur crowdfunding advice to help every entrepreneur get every dime they ask for. Even if you’re not able to post an equity crowdfunding offering in Texas, preparing for the inevitable enactment of federal Title III equity crowdfunding is a smart move. Throughout the past few months we have published several articles offering entrepreneur crowdfunding advice and once Title III is enacted we will continue publishing helpful blogs. Whether you need a speed-course for Texas equity crowdfunding or you’re steadily preparing for a federal Title III offering, here is some equity crowdfunding advice you should know already:
Get Your Company Documents Organized
Half of the reason Title III equity crowdfunding is taking so long is because the SEC is worried about fraud. They don’t want scammers to create offerings and steal people’s money, which is fair. We wrote a blog in early September about the base filing requirements for equity crowdfunding entrepreneurs that details a checklist for every crowdfunding offering. The last thing you want is for your momentum to be stalled by disorganization – here is a quick breakdown before you read the full article:
- – Tax Returns
- – Financial Statements
- – Business Plan featuring company name, legal status, physical address, website address, names of executives, directors and significant shareholders, description of business, description of the use of funds, fundraising target and deadline, the price of securities being offered and more.
Do Your Homework on Successful Offerings
Patterning your actions after those who have succeeded before you is not a copout; it’s a blueprint for success. For example, Kickstarter and Indiegogo never take down campaigns once they’ve closed. If you find some similar products or services that succeeded on these crowdfunding platforms, why wouldn’t you read through their offering and see what worked?! It is a no-brainer and some of the easiest entrepreneur crowdfunding advice to pass along.
For example, if you have a special idea for a cooler, there are dozens of cooler offerings both live and closed to reference. Who had the best pitch? Why? Who had the best video? Why did it stand out against the rest? Almost every competitive sport or business involves scouting your competition for strengths and weaknesses. Equity crowdfunding is no different.
Set a Reasonable Funding Target
Establishing your final funding target is a major decision. Ask too much and you probably won’t come close, meaning you get no funds at all. Ask too little and you may reach your goal but what good is 10 months of money when you needed 12 months of financing to survive? Finding the perfect number takes a lot of time and effort, but considering the aftermath of failing, it’s worth it.
The main factor in your final funding target is what round of funding you’re in. Initial and ongoing costs are different for everyone and should be calculated down to the penny. My entrepreneur crowdfunding advice? Check out our old blog that answers the question, “How Much Money Does My Startup Need?”
Reach Out to Familiar Faces before Launch
Reaching the 20% milestone of funding is crucial to your success. In fact, it may be essential according the crowdfunding portal Kickstarter. According to their crowdfunding statistics page, “79% of projects that raised more than 20% of their goal were successfully funded.” Basically 4 out of 5. That is a high enough percentage to say to yourself, “Yeah, I need to get there somehow. Fast.”
The fastest way to do it? Tell all of your family, friends, coworkers, neighbors, exes, friends of friends and your hairstylist about your upcoming campaign. Let them all know ahead of time so they are prepared to pledge the day it opens. Nothing gives outside investors more confidence than to see an offering shoot up to 20-40% in a matter of weeks. It should give you some confidence as an entrepreneur, as well.
Communicate with the Crowd
Online crowdfunding offers so many opportunities to communicate. So many in fact you need to post, chat, tweet, update and email as often as possible. And don’t just answer questions (make sure to respond quickly and provide thorough answers). Ask the crowd questions on what they like and don’t like about your product/service. These are free, 100% authentic consumer reviews you can use to improve your business, so be active! Geri Stengel, the owner of New York City-headquartered Venturneer, offered his opinion on the value of communication and social networks:
“Crowdfunding is really about your social-media network. Make sure you have built out your Facebook fans, your LinkedIn connections, your Twitter followers, (and) your email list. All of that is your social currency.”
If some of this information made you say, “Geez, I know this already,” we have done our job. When you get to the point where information or advice becomes so familiar it makes you roll your eyes, it means your brain has fully absorbed the content. At truCrowd we want every entrepreneur to succeed and reach the funding target for their first, second or third round of equity crowdfunding. We feel it is our duty to pass along all of the valuable entrepreneur crowdfunding advice we can offer and sometimes emphasize the really important elements more than once. We hope you have either discovered new advice or deepened your existing knowledge of running a successful campaign.
Thank you again for reading and please leave your comments below!