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Think of Equity Crowdfunding like a Product Launch

  • By
  • November 5, 2015
  • 4 minute read

This is part of an ongoing series on the lessons that we’ve learned at SeedInvest from helping companies to promote their equity crowdfunding campaigns on SeedInvest. We have had several companies receive millions of dollars of investment interest from thousands of their customers and we’ve seen some common elements of successful campaigns.

How should companies promote an equity crowdfunding campaign?

We tell companies to think about this whole process in the same way that you would think about a product launch. Think about whatever you would do in your business to do a good product launch, and those are the same things that you will want to do for an online capital raising. In your own business, if you would launch a new product by hosting a glitzy party and inviting lots of journalists along, then that’s the thing that you should do to launch your capital raise. If in your business, you would launch a new product by creating a funny video that you would push out through social media influencers, then that’s the way that you should raise capital.

There are also a some tricks that are common to every company that is successful in raising money from the crowd. The most important lesson is that we’ve found that, no matter what your company’s strengths and weaknesses are, email is probably the most important thing in terms of moving the needle. When people receive an email, it’s in their inbox and they can take immediate action on it. We’ve consistently found that email is the most powerful way of reaching out to your users.

What are the key steps to promoting an equity crowdfunding campaign?

There are three main phases to launching a new business, a new product line or an equity crowdfunding campaign:

1. Direct Promotion

The first phase of the launch is reaching out to your direct connections. This phase is really about relationships. The direct phase includes sending an email directly to your most important customers talking about the campaign. You can segment the message to different types of users so that they receive a customized message. You may also want to run events with customers and influencers that you’re already connected with.

2. Social Promotion

The social phase is about building and maintaining momentum. This phase is more about indirect connections, so the focus is on social media, community management and online content. Best practice these days is for social media engagement to be content-led, so you’ll be creating YouTube videos, infographics, and company blog posts.

This phase is all about creating excitement around the campaign and explaining to affinity groups or communities of interest why they would want to be part of what you are building, and therefore why they should invest their own cash into your company.

Also, it’s about social posting and reminding people that the campaign is on and that you’re making progress. The sort of people that are reached during the second wave are going to be influenced by social proof. They love to see things like “we’ve reached X-million dollars” or “we’ve reached X-thousand people”. This phase is really about momentum and social proof.

3. Public Promotion

Then there’s the third and final phase that comes towards the close of the campaign. This is when we start to activate people’s fear of missing out. It’s also the largest phase in terms of scale because you’ve built up so much momentum from your direct promotion to early adopters, and from the social promotion to create a groundswell of people who are interested in your product and your company. The third phase is where you actually push your campaign out to the public in a big way.
If you think of the six degrees of separation, we’ve gone one degree in phase one, two degrees in phase two, and then beyond that, phase three is basically anyone else.

The people that you reach during this phase will be hearing about your business for the first time as a result of the fundraising campaign. That’s a different type of message, and they need to hear some slightly different things from the previous audiences. These new people need to hear:

  1. About the backstory for business, which is similar to the message in the first phase.
  2. They need to hear about the momentum and the excitement about the round, just like the second phase.
  3. And they also need to hear about what the product is and why is this an exciting industry.
    You need to tell them the whole story to help them understand why they would want to invest in your company.

This final phase is also where public relations and mass-scale platforms, like Facebook advertising, do very well. You can push Facebook ads to new demographics, you can use paid video promotions to amplify your efforts from phase two. This final phase is the stage that’s most like launching a new consumer product.

By the time you get to this phase, your message needs to be super simplified. You need to somehow explain to people what the product is, what the company is and how they can invest in it. That’s a lot to try and convey in one advertisement or one press release.

Do you have to deliver the entire message in each phase?

You can deliver your message in a couple of separate steps. You don’t have to try and address all of the content in just one step. What you can do is just get the beginning of the idea in front of people, or get what we call the hook in front of people. If you can figure out what the hook that sparks people’s interest, then you can let the funding platform do most of the work in terms of showing momentum and telling a story about the business.

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