How To Find Investors For Your Business,
Through Equity Crowdfunding
Building a business can take a lot of capital to get off the ground… and it can take even more cash to scale, once the initial traction has been gained. Fast growth is often capital-hungry. So, you may be wondering how to find investors.
You’re in the right place.
When thinking how to find investors, most entrepreneurs will first think about getting a bank loan, or maybe to pitch to venture capital. While these can work, this article focuses on an alternative method – how to find investors fior equity crowdfunding.
After you have finished reading this, you will have 10 actionable ways to find investors for equity crowdfunding, and a pathway to start building your crowd for fundraising success.
Table of Contents
Why Equity Crowdfunding?
If you are completely new to equity crowdfunding, you might like to read this related article which introduces equity crowdfunding and how it works. Essentially, equity crowdfunding allows startups & growing companies to seek investment from members of the public, through a public campaign conducted over the Internet.
It can be used to raise between around US$50,000 at the low end, up to around US$1 million at the high end (*or more, depending on where the company is incorporated).
- Equity crowdfunding is a bit like a Kickstarter campaign – except the money from the crowd goes towards shares of ownership, rather than a pre-ordered product.
- Equity crowdfunding is also kind of similar to an initial public offering on the stock exchange, but it’s for companies at an earlier stage of development, with fewer legal requirements (and therefore, fewer legal expenses).
A dollar is a dollar, wherever it comes from. However, equity crowdfunding has several additional advantages over other methods of raising funds.
- It allows a business to raise money and promote itself… at the same time.
- Money from equity crowdfunding can often be raised on better terms than from angel investors / VC
- Unlike debt funding, there is no obligation to pay the money back
- It works for more kinds of busines models than “rewards crowdfunding” (run by sites like Kickstarter & Indiegogo)
Creating Your “Investor Avatar”
So, how to find investors for equity crowdfunding?
Before you can attract a crowd, you need to know who that crowd is. What sort of person are you trying to attract?
The answer to this question cannot be “everyone”. Not all members of your crowd are alike. Some people in the orbit of your business are only ever going to be customers. Customers are great, of course – every business needs customers! But the customer/provider relationship is merely transactional. Customers will buy what you’re selling, but if a better offer comes along, they’ll quickly make the switch to your competitors.
Startups are frequently advised to have a clear customer acquisition strategy. It is rarer, but perhaps even more important, to also have a separate loyal follower acquisition strategy.
Loyal followers are those who are in love with your mission statement. And, they’re the ones you’re going to be counting on when it comes to equity crowdfunding. In the crucial first few days of your (future) equity crowdfunding campaign, they’re the ones who are most likely to tip their invest dollars in, and provide leadership to everyone else.
So, what do loyal followers look like for you?
What sort of person is going to be so enraptured by your project, to the point that they’re going to go around telling their friends about it? The answer to this question will tell you how to find investors.
- Where do they live?
- How old are they?
- What sort of music do they listen to?
- What is their income level?
- What are their hopes, dreams, and aspirations?
10 Ways To Grow Your Crowd (How To Find Investors)
Once you know about what your ideal crowd looks like, the next stage is to go out and find them. This means showing up where they are, and gaining their attention.
Here are 10 ways how to find investors, via crowd-building.
1. Friends & Family
Friends and family can be a source of capital to try to get on board before launching your other crowdfunding promotion efforts.
The best balance is to make them aware of your campaign, but do not make them feel pressured to contribute. A nice compromise could be to ask your friends and family to invest a modest amount, i.e., the amount they might otherwise spend on a birthday gift. This will allow you to start your external promotion activities with at least some money in the kitty, and it will bring your friends and family along for the ride.
2. E-Mail / LinkedIn Outreach
It will be far more effective, and far less costly, to reach your existing email list than anyone else. So, it is best to build that list in advance of crowdfunding.
Cold e-mail outreach should be done tastefully. The tone of your messages is important. You could send a message with a link to the offer page and ask them to invest. However, this is a rather blunt way of doing it. Most people instinctively recoil when asked for money outright.
Send emails to targeted people who will actually have interest in what you are doing, rather than spamming people en-masse. Also, realize that people can smell a templated e-mail, so build in some degree of customization to each outreach message you send.
3. In-Person Meetings
Just because equity crowdfunding is done over the Internet does not mean you should try to conduct the whole campaign from in front of your computer screen. Larger investors can merit facetime. If you can get one person to contribute $10,000, then it is just as beneficial to your campaign as getting 100 people to contribute $100 each.
Make sure you are spending time with the right people! One founder drove to meet an investor, spent an hour with them one-on-one, provided product samples, and went through the market and the business plan in great depth … and at the end of it all, this investor contributed the princely sum of … £10.
Giving people the chance to meet you, look you in the eye, and shake your hand can be key. Meeting someone in person always leads to more trust than an online interaction.
You can organize your own event, but you might have more success from appearing at the ones that the crowdfunding platform holds. There will be more of an audience, and it is less organization on your part.
If you do invest the time in going to events, try to get a speaking slot. Being an ordinary attendee is one thing, but it’s far better to be on the stage where multiple people can hear your message at once.
5. Social Media
Social media will be a more effective way how to find investors if your company has a strong “social good” element to it, as these projects are naturally more shareable.
If you plan to use social media extensively, focus less on the fact you are raising money, and more on the mission you’re trying to accomplish. Jarno Alastalo of Heimo raised €50,000 through equity crowdfunding, and explains:
“We combined two messages in our campaign – our mission, which is to help people with mental health issues, and our business case as a good investment. One in three people suffer from mental health problems, so almost everyone has relatives and friends who are touched by the problem we’re trying to solve. That made our campaign especially shareable.”
Showing what you are working on can help generate inbound attention. You never know quite who is reading it, and it can find its way into the hands of potential investors. It helps you to remain visible, without a lot of outreach effort required on your part.
Content can be shared on your own blog, or if you do not have your own website, you can still post content on sites like LinkedIn, Medium and Goodreads.
Another excellent idea is to follow the accounts of the investors you are trying to target. While the e-mail inboxes of the top investors can be overloaded, anyone with a blog will be pleased to see if someone leaves a comment on their site. Do it enough, and your name will start to become recognizable.
7. Pay-Per-Click Advertising
Increasingly, platforms like Facebook and Instagram are “pay-to-play” for businesses trying to promote themselves. So if you’re wondering how to find investors on through these social media platforms, a faster way to do it is to buy pay-per-click ads, which you send to your own website’s landing page. Collect the e-mail address, so that you can start to build a direct relationship with the target prospect.
8. Rewards / Incentives
Just because you are offering equity does not mean you can’t also offer other incentives alongside it. You might get more interest if you also offer your investors the sweetener of a bonus.
For example, EkoRent gave all of their crowd investors a few hours of driving time for their electric vehicles The great part about this is that it can introduce new people to your company. Perhaps the people who used the free hours of EkoRent driving time also told their friends about the experience and became frequent customers themselves.
Make sure you budget the costs of the rewards into the amount you are raising – if you need US$500,000 for business development, and the rewards will cost US$20,000, then you really need to raise US$520,000, after fees.
9. Incubator / Accelerator Programs
Incubators and accelerators invite entrepreneurs to join their programs to be supported by others working on similar projects. They can also offer some seed funding, before running a proper fundraising round.
Depending on the prorgram, incubators / accelerators may also offer business advice, mentorship, and introductions to investors. Part of the advice will probably be around pitching and how to find investors too.
A generic press release isn’t going to get any cut-through – by itself, doing crowdfunding is not news. To get journalists interested, you need to ask yourself: why should the readers of their publication care about your story?
It is better to be featured in the press for genuine “interest” reasons, by smaller, more targeted publications. It is a matter of figuring out an angle that you can go to journalists with, that achieves both your crowdfunding promotion goals, and makes the journalist look good too.
Media can extend beyond the mainstream press. Look to more specialized audiences as well, such as podcasts, bloggers, and webinars. The closer the match their audience is with the sort of person likely to be most interested in your company, the more likely you will be able to find investors.
Be A Real Person – Have Empathy With Your Crowd
The world is getting faster, more obsessed by clicks, impressions and “engagements”. It all adds up to a more superficial, less human world. We have greater technological connectivity than ever, and yet we have never felt so alone.
So, want to know how to stand out? To really stand out?
Be authentic instead.
Be easy to contact.
When someone in your crowd emails you, take the time to reply.
When someone in your crowd calls you, take the time to answer.
This kind of authenticity isn’t as “scalable”… but at least it works. People hate feeling like numbers in a spreadsheet.
Remember that behind every email address, every order, and every customer enquiry is a real person. If you want to know how to find investors, talk to people on a human level, and you’ll succeed with crowdbuilding.
Then, when it comes time for equity crowdfunding, you’ll already have an army loyal followers on your side.
So, how to find investors?
Different promotion techniques will work best for different companies.
- The electronic channels such as email and social media are more effective if your aim is to raise small amounts from lots of investors – this tends to work best for consumer businesses, trying to grow their crowd through crowdfunding
- In-person channels like events and meetings will support businesses which can command large amounts from large investors – the “potential unicorns”
Above all, finding investors means being strategic about who you talk to.
If you want to learn more about how to find investors and raising money through equity crowdfunding, the next step is to watch the Equity Crowdfunding Video Training walk-through, which you can access for FREE by clicking here.
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