Synopsis: Social media is a very tempting strategy for equity crowdfunding campaigns because of its seemingly enormous global reach. But is your campaign doing it wrong? This article points out some of the most common mistakes to do with equity crowdfunding social media, and what to do instead.

Crowdfunding Social Media Is Not A Silver Bullet

The ubiquity of social media has convinced many startups and growing companies that it will work miracles. There are billions of Facebook and Twitter users, so social media seems to be the perfect audience. For one thing, it’s a gigantic collection of people! And social media is the sort of thing that can be done without even needing to leave the comfort of the co-working space!

But the actual on-the-ground experience of crowdfunding social media is very different than this idealized dream. Startups and growing companies are universally left frustrated and disappointed if they imagined that social media would draw in legions of fresh new investors, and all the money that comes with it. Why? Those in charge of running the crowdfunding social media campaign don’t realize something critical…

Before Someone Will Invest In You, First They Must Trust You

In almost every case, social media fails to ignite an equity crowdfunding campaign because the potential investor does not yet trust the company seeking funds.

Here’s what typically happens:

1. The equity crowdfunding campaign launches, and the countdown is on!

2. The campaign needs money for their offer to be a success. They go out to every social media channel they can imagine – LinkedIn, Facebook, Twitter, Pintrest, Instagram – you name it, the campaign will try it. They will go into every Facebook group that has a passing relevance to their company. They will use automated tweeting tools like Buffer to carpet-bomb as many messages out as possible.

3. All the messages will urge all and sundry to come and visit their offer page and invest. There may be a little information about the company, but mainly it will be all hard-sell. “Our offer is only open for 7 more days! Invest now so you don’t miss out!!” Scarcity and time-critical calls-to-action are the main tactics used.

4. The target investors browsing their social media feeds see these messages from a company they have never heard of, and angrily sigh “UGH! Not another yucky advertisement on my screen!”. They scroll past as quickly as possible.

5. OR if the campaign looks as though they are involved in some kind of “social good” project (such as electric vehicles, cleaning up the oceans, sustainable farming etc…), then they might give the campaign a “like” before they move on with the rest of their day.

6. Those who are running the campaign are left feeling frustrated that their social media efforts were so spectacularly unsuccessful – and they don’t know why.

Needless to say, this is the wrong way to do equity crowdfunding social media – but it more or less describes the way that 95% of campaigns are approaching things – spamming as many people as possible with the link to their campaign. Then they wonder why it didn’t work.

crowdfunding social media

Social Media Is A Very Superficial Interaction

Social media is awash with vanity metrics:

  • Views
  • Likes
  • Comments

But no matter how many views, likes and comments that a campaign gains, it doesn’t add up to actual money that can be taken to the bank. The difference between getting a “like” on a campaign and getting a real dollar is massive. It costs someone nothing to “like” your campaign. But to have their money locked up in your startup for years? They need to trust you first.

So, How Do You Make Somebody Trust You?

The hard truth – and the one that most campaigns do not want to hear – is that the sort of trust required to convince someone to invest their money into your startup must be built over time.

Think of equity crowdfunding investment as being like marriage. A person you find very attractive is not going to marry you after the first date. To get them to agree to spend the rest of their life with you – ’til death do us part – you are going to have to show them that you are a good choice as a life partner. When it comes to romantic marriage, it might (for example) include physical chemistry, dependability, emotional support, and providing each other with joy and excitement in each other’s lives. If that kind of bond is missing, then a marriage simply is not going to work. There will also need to be a lot of dating and time spent together before the marriage proposal. And before you try such a grand gesture, you will want to get the relationship to the point where getting a “yes” is a Fait Accompli. The equivalent in equity crowdfunding is to use social media, email marketing, and other interactions as the dating.

Only once there has be plenty of that already do you “get down on bended knee” and ask for them to invest in your company. Of course, the startup which is running an equity crowdfunding campaign does not have time on their side. The very reason they are expending so much effort on a crowdfunding social media blast is because they need people to invest right now – not later. But it’s not going to work.

The moral of the story – if you are thinking of running an equity crowdfunding campaign in future – start “dating” your crowd now, so that they’ll fall in love and agree to “marriage” when your campaign eventually launches! Don’t use crowdfunding social media blasts as a poor substitute for building a long-term relationship with those that matter.

Join The Free Equity Crowdfunding Training

You Will Learn:

✓  How to use social media to work with journalists

  How to target the social media followers of others

✓  How to reach out to social media influencers