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Home (/) Crowdfunding Resource Center: News, Education, and Data (http://blog.crowdrabbit.com)ąCrowdfunding (http://blog.crowdrabbit.com/category/crowdfunding/)ą7 Steps to Create a Winning Equity Crowdfunding Campaigną

7 Steps to Create a Winning Equity Crowdfunding CampaignBY BETH BRAVERMAN (HTTP://BLOG.CROWDRABBIT.COM/AUTHORS/BETH-BRAVERMAN) | MAY 19, 2015

The world of equity crowdfunding has experienced exponential growth since the passage of the JOBS act three years ago.

Last year there were some $230 million invested in equity crowdfunding deals, according to Wisdom Fund

(https://fundwisdom.com/sites/all/files/cfund//fundwisdom2014dealreport.pdf).

That’s a lot of cash, but there’s also a lot of competition to catch investors’ eyes and secure enough funding to launch a

business to the next level. If you’re interested in using equity crowdfunding as a source of capital, follow these steps.

1. Wait until you’re ready. The most successful crowdfunding campaigns feature businesses with a proven business model

and a bulletproof business plan for going forward. You’ll want to show investors why it’s worth putting their money to work

for you, and exactly how you’re going to grow that cash going forward. You’ll need to work with an accounting firm to pull

together hard numbers on how many customers you have, revenue to date, and some deals in the pipeline.

If you haven’t already, now’s the time to hire an accounting firm to help prepare several years of financial statements, and a

securities lawyer to draw up a shareholders agreement.

Launching a crowdfunding campaign before your business is ready is a waste of your time, and could hurt you if you decide

to run another campaign at a later date. Instead of rushing to get a crowdfunding campaign started, spend some time

working out any issues that could damage that all-important first impression.

2. Prime your social network. Smart entrepreneurs are always growing their networks, both online and in-person. Make sure

that your friends and contacts know that you’re going to be launching an equity crowdfunding campaign. Getting your

network to contribute to the campaign (http://blog.crowdrabbit.com/attracting-investors-part-two-equity-crowdfunding/)

in early stages will boost your credibility and the project’s appeal to folks you don’t know.



Personally reach out to any high-profile investors in your network to pitch your business. When and if they invest, tout their

commitment to the campaign to raise its profile. Then, consider hiring a public relations firm, particularly one with social

experience, to spread word about the campaign to those outside of your network.

3. Pick the right platform. There are dozens of equity crowdfunding websites, and each one has its own niche and a slightly

different audience. They also all have slightly different fee structures. Do some research to make sure that the platform on

which you’re listing is a good fit for you and your business.

For now, equity crowdfunding is still limited to accredited investors, but starting this summer you’ll be able to legally court

any potential investors. Before going for the mom-and-pop investors, however, make sure that you’re ready to meet all the

other SEC rules that kick in once you do so.

4. Have a compelling, professional video. The crowdfunding video is the new elevator pitch: You’ve got a limited time in

which to explain your business or product and convince an investor to jump in. The good news is your video can be longer

than the typical elevator ride—but not much longer. Shoot for a two- to three-minute trailer that introduces both the

business and the team running it.

You’ll also want to use the video and an accompanying pitch deck to explain how you’ve come up with your valuation, why

you need money, what you’ll use it for, and why you’ve chosen to go the equity crowdfunding route instead of seeking

venture capital.

5. Include a Call to Action. Your crowdfunding campaign is really just a sales pitch, and no sales pitch would be complete

without asking the potential buyer to close the deal. Ask for the money that you want, and tell investors as specifically as

possible why they should give it to you.

Unlike rewards crowdfunding, which typically aims to get many people to give a small amount of money, your goal should be

to get a few investors to give large amounts. Remember, the more backers you get, the more expectations you’ll have to

manage.

6. Respond quickly to queries. Smart investors will want to do due diligence and will have questions about your business

plan, your financial statements, and your experience as an entrepreneur. They’ll also quiz you on your valuation and your exit

strategy. Answer any questions quickly, politely, and completely. The more transparent you can be, the better.

7. Deliver what you promised. The best way to get more investors is to prove yourself (http://blog.crowdrabbit.com/raising-

capital/communicating-with-investors/) to those who put money in early. Create a successful business, and your investors

will be excited to evangelize it within their network.

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