3 common mistakes to avoid when launching an equity crowdfunding campaign
June 28, 2018
Kathy Kraysler CMO, ValueSetters
From a poorly written offering page to a lack of marketing for your campaign, there are a number of pitfalls that can lead to an unsuccessful raise. Avoid these three common mistakes to increase your chances of success.
1. Posting a video that’s longer than 2 minutes
Don’t try to tell your entire story. Your video should be no longer than 90 seconds to 2 minutes, and it should make clear what your company does and how it’s better than the competition. Keep the pace quick and the content engaging. If you fail to capture viewers’ attention within the first 30 seconds, they will leave your offering page and won’t invest.
2. Not mentioning any lead investors in your company
If you have a lead investor, say so. This provides instant credibility. The first two weeks after you launch are the most important days of your campaign. Investors are looking for momentum, and they will lose interest if they perceive there’s no traction.
If you’ve had one or more investors already make significant investments in your company, state that explicitly on your offering page. This will give you instant momentum.
3. Skimping on marketing
While it’s tempting to rely on your own network of family and friends, the truth is that’s rarely enough for a successful raise. You also can’t just hope investors will find your offering. A comprehensive marketing plan, including retargeting, lookalike targeting, email, social marketing, and influencer marketing must be executed in order to reach the right audience of potential investors and maximize your chances of success.
If you don’t have a strong network of potential investors to tap, then hire a marketing consulting firm to do the work. You don’t want to skimp here. It’s crucial to set aside a substantial marketing budget. The more you’re trying to raise, the more you’ll need to spend.
A good marketing consultancy should have both in-house digital marketing expertise as well as an extensive network of private investors to reach out to.
How much should you spend on marketing? While there are a number of factors that will affect your results, a good rule of thumb is to budget $10,000-$20,000 for a Reg CF raise (under $1,070,000) or $50,000-$200,000 for a Reg A+ raise (over $1,070,000). These numbers include only the cost of digital advertising, but not the cost of your marketing firm.
Avoiding these 3 all-too-common mistakes will put you in good shape to raise capital through equity crowdfunding.
Interested in raising capital? See how ValueSetters can help.