Crowdfunding Hacks: What makes a killer pitch
In Planning growth, Raising finance, Rapidly scaling - 2 weeks ago - 4 min
Crowdfunding Hacks: What makes a killer pitch
Guest Author: Luke Lang, Co-founder, Crowdcube
If you’re looking to crowdfund the next stage of your businesses growth, read these top five crowdfunding hacks from Crowdcube’s Co-founder to help you create a killer investment pitch.
1. Ensure your valuation is fair
Valuing your business may seem like a daunting prospect but it’s an important factor for investors when considering an investment, so it’s worth doing the research to ensure your valuation is fair and realistic. If you’ve ever seen Dragons’ Den, you’ll know how much of a hot topic valuation is. And it is often the sticking point when potential investors decide if they are ‘in or out’.
Start by doing some research. Look at the valuation of your competitors, similar sized businesses and those in relevant sectors, as well as other companies that have successfully raised finance, so you can benchmark your valuation against them. Make sure you also consider how much traction your business has had, for example, what contracts or customers have been secured, what revenue has been generated to date. Ultimately your valuation needs to be robust enough to stand up to challenge from potential investors.
Find out more about valuing your business.
2. Create a compelling video
With crowdfunding, a video is an opportunity for investors to get to know you and your team and it is your chance to communicate your investment proposition in a succinct and compelling manner. This is your time to put forward your personality, passion and vision for the company, as people invest in people – not just an idea.
A compelling video will help bring your business to life and show that you have the skills and drive to execute your business plan.
3. Know your audience
It is important to understand your audience and what information they will want and need to make an informed decision about whether to invest in your business.
You need to remember that you are not promoting your product or service. You’re promoting your business as an investment opportunity and you need to adapt your message accordingly to show why you have a compelling opportunity.
Now is not the time to be shy; you’ll want to contact and spread the word that you’ll be raising investment through crowdfunding to as many as people as possible. You can do this by utilising your networks, which may extend wider than you think.
Bluebird Tea & Co. raised £360k in just a matter of days in their successful crowdfunding campaign last year (£200k over their original target). When speaking to founder, Krisi Smith about who she contacted to get the campaign off the ground, she said “Mike and I really brainstormed all our potential connections and made sure we asked everyone to share with their circles for maximum exposure. In the end, we had investors from secondary school, family and friends, university college, university business school, suppliers of Bluebird, stockists, past employers, past employees, team members, old sports teams, press contacts, contacts from networking events, local community groups, charities we have supported. The list goes on.”
4. Establish your key messages
This leads perfectly to the key messages you’ll need to prepare when promoting your crowdfunding campaign. Just like any other marketing campaign, you’ll need clear and concise messages that are consistently communicated throughout all the activity related to your crowdfunding raise.
Your key messages are summarised in three brief points, which cover:
- The business proposition, aim and why you’re raising finance
- Examples of traction such as revenue, partnerships and contract wins
- Future potential and market opportunity.
When talking to people about your crowdfunding raise, don’t assume that they know what your business does or about your raise.
For example, when communicating to close friends and family, customers and employees you’ll assume they know what your product or service is, but they may not know the details of your business, plans for the future and why they should invest.
Your business contacts, angels/high net worths and venture capitalists (which you’ll seek large cheques from), probably won’t know anything about you or your business. They will want to see your business plan, market opportunity and understand how you plan to generate high returns for them before they even consider parting with their cash.
Your campaign messaging also needs to be fair, transparent and not misleading. Make sure the information you provide is factual and accurate and will stand up to the scrutiny of investors.
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5. Secure lead investment
Getting your crowdfunding campaign off to a good start is vital to its success. So it’s important to engage your own network early on to ensure you build momentum right from the start of your campaign. We expect you to raise at least 20% of your target before going live to the wider crowd.
Shareholders have a vested interest in seeing your business succeed, so inviting your existing network to invest is a great opportunity to increase engagement, loyalty, and advocacy. Engaging your own crowd could have wider benefits to your business that go well beyond an injection of funds.
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Guest author: Luke Lang, Co-founder, Crowdcube
A highly-qualified marketing and public relations specialist, Luke has worked in blue-chip brands as well as for start-up companies. He also ran his own marketing consultancy before launching Crowdcube with Darren Westlake in February 2011. Luke was named by Debrett’s as one of Britain’s 500 most influential people in 2017 and was also selected as one of the Sunday Times ‘Maserati 100’, which recognises game-changing entrepreneurs who have been particularly influential in their respective industries.