How to raise over £1m+ in crowdfunding

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.

Investment Strategy>
Project Plan>
Investment Assets>
Lead Investment>
Pre-registration & Network Scoping>
Communications Plan>
Marketing & PR>
Investor Communications & Campaign Management>

Investment strategy.

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.

1. Set the public target at a realistic and achievable level: Setting your target is largely dictated by how much money your financial model says you need to raise to achieve your growth plan, combined with how much lead investment you have managed to secure. If you don’t meet your minimum target on the platform you don’t get any of the investment and you want to ensure there is plenty of momentum behind your campaign to capture the crowds’ attention. When it comes to raising £1m+, consider what your round cap is. If £1m is the minimum amount you want to raise, then you’ll need to bring at least £750,000 to the party in advance (more on that later…), if £1m/£1.5m is the maximum you want to raise at your proposed valuation, then you can set your target lower and “overfund” to this position. For context, crowdfunding campaigns which meet their minimum target tend to overfund by 150% as a general guide.
2. Price the round for your lead investors not the crowd: Your business is only worth whatever your lead investors are willing to pay for it. Inflating your valuation simply because you can get crowd investors to pay the price is a short-sighted strategy that will come back around to bite you when you next try to raise, especially if you have failed to meet your targets and reach your critical points of growth which ensure an inflection in your valuation.
3. Treat the crowd exactly the same way as you would any other investor: Crowd investors are just as valuable as traditional institutional investors and angels. In fact, many professional investors use crowdfunding platforms to find deals they would like to invest in at a later stage or in a personal capacity. You never know who is watching!
4. Prepare for the future: There are some important considerations to take into account when it comes to running a crowdfunding campaign and how this impacts your investment strategy in the future. Important questions to ask yourself include:
   – What is your exit strategy and how does this impact your crowd investors?
   – Will you raise from the crowd again?
   – Why do you want to raise from the crowd? Note – the wrong answer is to raise at an inflated valuation! The right answer is to enable the public and your customers to have the opportunity to participate in what would otherwise be a closed investment round.

Project Plan.

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.

Investment Assets.

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:

1. A compelling and beautifully designed pitch deck: This should be added to the crowdfunding platform of choice in the restricted documents section. It should include a summary of your financial projections.
2. A financial model: You’re not obliged to upload your financial projections to a public-facing platform, but you should have a detailed financial model prepared and ready to share with investors who request it specifically.
3. Pitch Copy: This is a test in how succinct you can be when it comes to capturing the most relevant parts of your investment proposition. This content is subject to regulation and needs to be proved during the platforms’ due diligence process.
4. Campaign Video: The most successful crowdfunding campaigns have strong and punchy video content that supports their whole campaign.

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.

Lead Investment.

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:

• Existing investors following on in this round
• Angel investors and syndicates
• Early stage investment funds
• Customers and community (raised in a private live campaign)

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.

Pre-registration & Network Scoping.

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.

Communications Plan.

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.

Marketing & PR.

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.

Investor Communications & Campaign Management.

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:

1. Ensuring your foot is firmly on the gas throughout: The most successful campaigns leave absolutely no stone unturned. You want your round to complete knowing that you didn’t leave any money on the table and you did everything you possibly could to make it a success.
2. Consistent and considered communications: It might sound simple, but often the most simple things are the most effective. Clearly and consistently communicating with investors is critical. How you respond to investor questions, emails and enquiries sets a precedent for how you will communicate with them in the future. Ensuring you read all of the questions, answer them as best you can and don’t skirt around the issue and promptly respond holds a lot of weight, especially on the public forum. The forum itself can make or break a campaign with most investors capable of investing serious sums of money observing the forum and responses before committing their investment.
3. Key roles and responsibilities: The best campaigns have people leading them with clear roles and responsibilities and are ideally run, or at least guided, by people with experience of executing on such projects successfully in the past.