Crowdfunding is the latest avenue for people looking to fund their projects. Business owners and entrepreneurs are flocking to a variety of platforms to help give their businesses a needed financial injection from the public. Crowdfunding can range from game developers raising money for an entire game to entrepreneurs finding enough backing to create their next exciting product. With so many projects being touted online it can be a little trickier than one might imagine getting your name out there and backers interested. Below is some great advice from CrowdFunnel on how you should approach crowdfunding for your business.
What is CrowdFunnel, what is unique about your form of marketing and what types of partners benefit most from your services?
CrowdFunnel offers a unique form of marketing and media buying for crowdfunding platforms, issuers and agencies. We generate fully-surveyed and verified Investor and Reservation leads, for both accredited and non-accredited investors.
Most companies would agree that they would prefer to focus marketing efforts on acquiring investors who have explicitly expressed an interest in being involved in crowdfunding and in specific verticals, both as a user on a platform matching them with opportunities, and directly with issuers.
We believe that traditional media buying – display and banner ads, PR, social media, search keywords, etc. – are all necessary components of a complete marketing strategy. However, most platforms and issuers aren’t experts in these areas and consequently their spends aren’t efficient in acquiring investors. Key words, for example, are highly expensive and everyone is buying the same keywords. If you look at the research coming out, anywhere from 50% to 75% or more of display ads aren’t even being seen. And, if they are seen, did the person viewing the ad even have an interest in the ad to begin with? We help our partners create efficiencies in their traditional marketing efforts while delivering verified leads of investors with real-time interest in their deals.
What types of companies perform best?
Our form of media works best with “full-service” platforms and issuers – those with the infrastructure to capitalize on real-time investor leads with specific interest in their deals. They possess the means to follow up via phone or text with that investor and find out what that investor is truly interested in, and what opportunities to match them with. Otherwise, without such outreach, how do you create a trusted relationship? There need to be multiple touch points with potential investors.
Unfortunately, most platforms don’t have the resources or a process to re-target leads in real time. Hence the problem why they are having a hard time generating leads on a cost-basis that makes sense for them. Even when a company like CrowdFunnel is willing to provide a fully-surveyed investor lead and eliminating a third of the traditional sales funnel, many platforms don’t have someone dedicated to follow-up with individual investors. And we’re finding that most don’t even have messaging ready to respond to the interest. More than 90% of them don’t have the capacity to call up a lead and offer them an opportunity in real-time.
And for issuers, many have even less resources to dedicate to marketing and investor acquisition. Do they have an infrastructure to accept in-bound leads, call them, follow up and re-target? Or since most of their presence is all online are the issuers making it so automated for investors that there are no touchpoints or relationship building opportunities?
What is the best one piece of advice for startups and for platforms looking to raise money to help then have a successful raise?
For startups and issuers, raising capital through crowdfunding is a tremendous opportunity. But just wanting to raise and offering your opportunity to investors isn’t enough to guarantee a successful campaign. Do you really understand how to market your opportunity and speak to an audience via the necessary channels? Find companies like CrowdFunnel and the creative partners we work with who specialize in content creation and understand the crowdfunding marketplace exceptionally well. The bottom line is: if you’re an issuer don’t think you’re the expert – you may be an expert in the vertical of your business but not in performance-based marketing or investor acquisition. Find the experts and our affiliated partners.
Even the firms who are securitizing the market have decided that not only do we know more about online marketing and lead generation specific to investor leads than their clients, but we are a necessary resource for the success of the platforms and issuers they work with. They realize we care about the long term value of an investor and understanding who they are, what they want and how to re-market and re-target them successfully over time.
What is the biggest challenge the crowdfunding industry is facing right now?
Oddly enough it is marketing. Every time we speak with a platform and they understand what CrowdFunnel does, they say “You understand our pain points and our biggest challenge and have a solution.” The lack of experience in-house in online marketing and investor acquisition is broad and deep. Even long-established platforms are realizing the limitations of their brands and messaging as they seek to broaden their investor base. And a big part of that comes down to a lack of education messaging targeted at individual investors.
Especially for non-accredited investors, as most don’t even know what crowdfunding means as an investment opportunity. They may know what making a donation or buying a product on Kickstarter is but they don’t understand crowdfunding as we in the industry view it, which is financing a startup or a company and actually owning a piece of it. Providing those answers is what companies like ours is undertaking, both by educating investors through marketing efforts to generate leads and survey their interests but also by actively creating content with those throughout the ecosystem – the folks who run the platforms, the founders of the startups raising capital on those platforms, and the thought leaders in our community. We want to understand everyone’s pain points so we can all solve them together and make the ecosystem strong and healthy for all stakeholders.
What does the future of equity crowdfunding look like?
The rise of the non-accredited investor as a vital stakeholder for both platforms and issuers. Even if at this moment you are only focused on accredited investors you need create a brand that is aspirational so that investors who are currently non-accredited aspire to be a part of the community and opportunities you are creating over anyone else. Platforms who build a brand and understand correctly how to market it and who to marketing it to efficiently will be the ones thriving and surviving in the 12-24 months after the new Reg A+ rules take effect. Platforms that by default become directories and aggregators of deals but lack efficient means to offering marketing to their issuers and exponentially grow their proprietary investor base will not survive.
For entrepreneurs – what is the biggest must-do that helps with securing funding? And what is the biggest don't?
All startups create a brand, on some level, for their company. However, when launching a campaign that brand is going to potentially be one of hundreds of startups competing for investor attention and capital on the same platform. Entrepreneurs need to find efficient ways to market their brand and answer questions such as: Who is building your creative? Is your messaging proper for the audience you are targeting? And most importantly, how are you driving the right traffic to that messaging?
This becomes even more critical as non-accredited investors take a seat at the table, and creates more questions for entrepreneurs: How are you communicating with and educating consumers and potential investors? How can they invest in your startup? What is the value proposition for your investment over another startup on the same platform in the same category? What does ownership and equity really mean for them as new investors? And, most importantly, how do you find these people when there are very little mass marketing and mass education efforts underway?
Because the average individual, accredited or not, isn’t going to trade shows or events to get that education – they don’t even know those events exist. You need to have a fully dedicated team of experts who know how to identify and reach those investors, such as performance-based marketers who know how to get in front of those individuals, get them to voluntarily enter the ecosystem, survey them and based on that data match those investors with the platforms and opportunities that THEY are interested in – not forcing an individual to be interested in a company or vertical they may have absolutely no desire to participate in or even understand.