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So you’ve decided that you are going to take the plunge and use equity crowdfunding to fund your business venture. In previous guides, we’ve explored what mistakes to watch out for, top tips and what makes a good pitch. But perhaps a pivotal question is: what do you need before you create your campaign?
Having an idea is one thing, but convincing people to pledge their money is completely another. To achieve the latter, you will need an effective plan that covers all bases, especially generating interest around your idea.
In this guide, we show you what you need before creating an effective crowdfunding campaign.
Perhaps the most important question you should ask yourself when planning your campaign, your crowdfunding goal gives investors an idea of your ability to value your business correctly. So when deciding how much you want to raise, you should consider the following:
Valuing early-stage companies is more of an art-form than it is a science, especially when it is a business that has just started its journey. A valuation of a business is determining what someone is willing to pay for it. So really, valuation is more of a sales process, which is backed-up with evidence
With that in mind, we believe that you valuation should be centered around these three questions:
The funding goal should cover your projected costs over 2-3 years. So, how much will it cost? Why are you seeking investment? Remember you’ll have to be transparent with your investors if you want to fund, therefore, make sure all your numbers are realistic and fair.
This is perhaps the most important part of your crowdfunding campaign as it is what could make the difference between you securing investment or not. The written part of your campaign needs to be as inviting as possible and should try to answer as many questions as possible while still telling your story in a convincing way.
Try to include the following:
Your achievements to date and a clear understanding of how the business will grow are all important, but they should be framed in a way that gives investors a sense of who you are.
Before deciding whether to host your campaign, crowdfunding platforms will want to ensure that your business is really what you claim it to be. Therefore, every statement you make needs to be evidenced so that the campaign as a whole can be seen to be transparent and not misleading.
So even though you should make your pitch as attractive as you can, this should not be at the expense of fact. And so you should therefore be able to validate any factual claims (such as experience and data) with evidence.
A video, infographics, photos, trademarks, associated brands all help in creating a compelling presentation. Investors look for pitches that stand out from the very beginning. Visuals provide the best chance of achieving this.
For more details on how to equity crowdfund, visit our dedicated guide.
Authors: Oliver Murphy & Sacha Bright
Disclaimer
To the best of our knowledge, the information we have provided is correct at the time of publishing. Sacha Bright is not a solicitor or accountant and we recommend that you seek professional advice on any topic discussed.
Tagged: equity crowdfunding alternative finance sme entrepreneur business
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