When it comes to promoting your capital raising campaign, it’s all about telling a compelling story to captivate your audience. Giving investors a front-row seat to your company’s growth is a complex type of marketing. Communicating the case for investment requires a delicate balance of messages relating to your product, company, and team. You need to compose an inspiring story that connects the past, present, and future of your business.

Public vs private rounds

General Solicitation

Funding rounds conducted under the 506(c) exemption are permitted to generally solicit, which means that you can advertise your fundraise on your website, across social media, or shout it from the rooftops (you should still be careful not to say anything inaccurate or materially misleading). However, in these types of offerings, the SEC requires companies to verify the accreditation status of all investors in their 506(c) offering. If you have publicly mentioned your fundraise on any online platform, forum, or article (e.g., AngelList, Facebook, TechCrunch) at any time in the past, then you may have accidentally engaged in general solicitation and therefore be required to verify the accreditation of all investors (self-certification by investors is not sufficient). Failure to meet these requirements can result in punitive action by the SEC.

On SeedInvest

At SeedInvest we help entrepreneurs throughout this process. Our platform guides startups through the process of creating a profile for presentation to investors and helps control which potential investors have access to the information. We also work pro-actively with companies to help them craft their marketing activities to promote their funding rounds.

506(c) New Rules with General Solicitation

DO:

  • Promote your financing on social media such as Twitter, Facebook, and LinkedIn
  • Send email blasts to relevant email lists about your offering
  • Speak about your offering at demo days, pitch events, and public events
  • Talk to the press and bloggers about your offering
  • Accept smaller investment amounts from a large number of shareholders up to a maximum of 2,000 accredited investors (i.e. raise $10,000 each from 1,000 people)
  • Verify the accredited investor status of each participating investor before closing, including by: written confirmation from a lawyer, CPA, broker-dealer or investment advisor or verifying income or net worth through financial documents
  • Use technology platforms for compliance and to extract shareholder value
  • Limit advertising materials to broad, non-sensitive, non-controversial statements
  • Have each key employee, 20% shareholder, director, and officer, new investor, broker, solicitor or other “promoter” complete a Bad Actor Questionnaire

DO NOT:

  • Start advertising without speaking to a qualified securities lawyer
  • Start advertising before you are sure about 506(c) because there is no going back to 506(b)
  • Allow any unaccredited investors to invest in your round
  • Make any untrue statements, misrepresentations or omissions (anti-fraud applies) regarding the offering
  • Include sensitive, confidential or controversial information in public advertisements
  • Include “puffery” or other boisterous or “off the cuff” statements in advertisements

506(b) Old Rules with no General Solicitation

DO:

  • Conduct private offerings with friends, family and your professional network
  • Reach out to individual investors through personal introductions
  • Confirm a substantive pre-existing relationship with every prospective investor to whom you speak
  • Confirm accredited investor status via self-certification (i.e. investors to check the box)
  • Have each key employee, 20% shareholder, director, and officer, new investor, broker, solicitor or other “promoter” complete a Bad Actor Questionnaire

DO NOT:

  • Talk about your financing at any public demo days or pitch events (i.e. do not mention that you are fundraising, do not talk about financial projections or business models)
  • Allow the press or bloggers to speak about your offering
  • Send email blasts about your offering
  • Talk about your offering on social media
  • Participate in business plan competitions open to the public
  • Make any material misrepresentations or omissions (anti-fraud applies) regarding the offering

1. Direct Promotion

Direct Outreach

For public rounds, the first stage of promoting a capital raising campaign is to inform your direct connections that you are raising capital. These direct connections already know you and know your product.

Customer Email

For public rounds, your customers can be a key source of potential investors and a group email is the most effective way of letting them know that you are raising capital online. You can craft this email to your customers to look like a “letter from the CEO” and invite your customers to share in your success by becoming investors.

One-to-one Email

For public rounds, your own personal network may not be a significant source of capital, but their vocal and public support can be a vital part of creating momentum and awareness of your campaign among potential investors. As well as the mass email to your customers, you should also share a link to your campaign with your personal and professional networks.

Events

For public rounds, running events for potential investors is a key way to allow potential investors to learn more about your business and your management team. As always, talk to the investment platform and your lawyer prior to launching any promotions for your offering.

2. Online Promotion

Community

For public rounds, social media and online communities can be an excellent source of investors. You can use social media to notify your existing followers that you are raising capital and to find other communities of interest that may also wish to become investors in your business.

Content

For public rounds, creating useful and informative content is a powerful way to communicate your credibility to potential investors and to make it easy for online communities to share their enthusiasm for your business with their peers. Content that is useful for a capital raising campaign can include:

  • Blog posts from the CEO about the vision for the company
  • Video interviews with key team members about their functions
  • Interviews with existing investors
  • Testimonials from customers

Influencers

Bloggers, YouTube celebrities and industry influencers can have substantial personal followings. These can make for powerful endorsements. During a public round you can use your relationship with influencers to encourage them to share your round with their followers.

3. Public Promotion

Press

For public rounds, public relations and press outreach can amplify your message by finding relevant publications that can write about your company and your capital raising round.

Advertising

For public rounds, online advertising can be an effective source of investors if the message and channel placements are highly targeted to find investors that will be strategically useful to your business.

This post was written by seedinvestedu on December 11, 2015

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