Over the last decade, crowdfunding has evolved and it’s now an increasingly popular funding strategy for growth-stage businesses and those looking to raise large sums of money.
Over the last 5 years, Raising Partners has built a reputation in the industry for executing some of the UK’s largest and most successful crowdfunding campaigns, with an average raise of £1.1m.
In this article, we share our insight on how you can raise over £1m in crowdfunding.
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When considering a crowdfunding raise it’s important to remember that the exercise is first and foremost an investment round as well as a marketing campaign. This means that you should approach a crowdfunding raise the same way as any other investment round.
The most successful crowdfunding campaigns are executed as part of a wider investment strategy, with the public-facing crowdfunding campaign the final part of a fundraising project and the last piece of the puzzle.
Once you have the foundations of your investment strategy in place and you have scoped out how your crowdfunding round fits in with the bigger picture, it’s critical that you put in place a detailed project plan. This covers all of the tasks from the moment you set out to fundraise to the moment the cash lands in the bank.
Crowdfunding, especially raising north of £1,000,000 is not a quick way of raising money (spoiler – there’s no quick way of raising money!). Some crowdfunding raises can take as long as 12 months to prepare for, depending on the level of lead investment raised, and on average, we’d recommend planning a seven-figure crowdfunding project to take 6 months to execute all the way through to completion.
Find out more about putting in place an investment project plan here.
Once you have your project plan in place, the first step is to get your investment assets in order. Remember, you should treat your crowdfunding raise the same as any other investment round, which means the assets you prepare for investors should be exactly the same. Arguably, this task is harder when you are pitching to the crowd as your investor deck needs to resonate with investors who are capable of committing £100,000 at the same time as retail investors who might invest £10.
You should focus on getting the balance right between compelling story and narrative and detailed and clear investment proposition and opportunity for growth. Too much of either and you risk your campaign falling flat as it fails to excite investors.
Here are the most important assets to have in place:
Businesses seeking upwards of £1m in crowdfunding should invest in these assets. Brand, appearance and first impressions matter, even more so when these assets are a very public representation of your business and convey to investors, your customers and the crowd what it will be like to have an ongoing relationship with you.
Raising lead investment is critical to the success of any crowdfunding campaign but it is arguably even more important when you’re raising over £1m. As a general rule, we recommend you raise at least 75% of your minimum target before you push your campaign publicly live. At Raising Partners we like to have as much as possible, often 95% or even launching in an overfunding position, so that we can build as much momentum as possible with the crowd.
Lead investment can come from many sources but most common are:
Lead investment must be raised on the exact same terms and share class as the public crowdfunding campaign in order to contribute to the overall investment total.
In tandem to raising your lead investment, you should also spend time scoping out your own network for potential investors and launch a warm up campaign for your community of customers and advocates. Typically, you can begin to do this 3-4 weeks before your public crowdfunding campaign begins. This is an opportunity to gauge level of interest and warm up your crowd to prime them for investing.
No one likes to be surprised with a sudden ask for money, so use this time to tell your story, build the narrative and set up one-to-one conversations with those who register their interest in higher tickets.
In the same way you should set out a project plan for the overall fundraising campaign, the most successful crowdfunding campaigns have a detailed communications plan in place prior to the launch of the public phase. Your plan should leave room for some flexibility as every live round is different, some fund very quickly and even end up coming off the platform in just a few days; some last the full 30 days and continue to overfund as much as possible.
Set your plan for the full 30 days and aim to draft all comms including key messages, social posts, campaign updates and press releases in advance. Remember, it’s important to allocate roles, responsibilities and times for each piece of comms and assign an overall project manager to ensure that everything happens when it is supposed to.
One of the biggest advantages of running a crowdfunding campaign, is that you can get your business in front of hundreds of thousands of people and use the opportunity to not only raise cash for your business, but also acquire customers. There are certain businesses that lend themselves more to crowdfunding than others, but on the whole, the best crowdfunding campaigns understand the marketing benefits.
This is where your overall business story really comes into play. Why should people care about your business more than the next? How are you going to make a difference? How are you fundamentally changing the market landscape and making your industry better for everyone, including your customers and investors? Businesses raising over £1m often have the most compelling answers to these questions and use these as the basis for their key marketing messages and PR campaigns.
It’s important to remember that fundraising and crowdfunding more broadly, aren’t necessarily PR stories in and of themselves, so if you’re looking for coverage on your raise, a better strategy is to focus on the business story and key messages rather than the fundraise itself.
Once your crowdfunding campaign is live, the final piece of the puzzle is the execution. This is largely focused on ensuring that everything that you said you were going to do in your project plan and communications plan happens when it is supposed to.
There are three key areas that businesses raising over £1,000,000 focus on when it comes to running the live campaign:
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