Dec 06

What does it take to Crowdfund?

By Nathan Rose, Assemble Advisory

“Pitching” has become standard terminology in the world of finance; it means delivering your investment story. The word comes from baseball, where one player (known as the “pitcher”) delivers the ball towards the batter by throwing it. Baseball aficionados will already know that having a strong pitcher on your team goes a heck of a long way towards winning the ball game. A strong investment pitch is just as important to your chances of a successful equity crowdfunding offer.

Keep Things Simple

Let’s dispel a couple of myths about pitching. It will not follow the format of those TV Shows Dragons Den or Shark Tank. Don’t worry about being brought into a room, in front of a panel of hostile judges who are itching to tear you to shreds for the benefit of the cameras. And nobody really cares if your PowerPoint slides are font size 16 or 20, Ariel or Times New Roman. So don’t concern yourself with that.

The most important thing to practice is being able to quickly and simply articulate what their business does and how it works. This is particularly important in equity crowdfunding, where investors often won’t get the chance to meet you in person.

Be A Great Company

The best way to come across as an amazing company in a pitch is, rather obviously, to be an amazing company – one which has both the big idea and has already made significant progress towards turning it into a reality.

Just because equity crowdfunding is new doesn’t mean the usual rules of investing aren’t applicable. You have to prove yourself, and the internet is not going to just hand you money. When I interviewed Republic’s Ken Nguyen, he put it very well: “Some founders come to us and think, ‘oh, geez, if we go up on the platform, then the money will just roll in.’ No! That’s not how marketing works, and that’s not how fundraising works. If you’re going to do crowdfunding, you’ve got to hustle, you’ve got to knock on every door. It’s a lot of work!”

What Your Pitch Must Include

You need to convince people that your company has the potential to do great things. How large, and how fast-growing is your market? What is unique about your company? What product categories do you have? Do these product categories match the actual needs of the target market you have identified? Who are the competitors? Who are the people in your company’s team, and have these people succeeded in this sort of business before?

You also should demonstrate how far along the path to success you have already come. This is where you get to brag, so don’t hold back. Have you already secured large, well-known clients? Put their logos in the pitch. Do you have excellent testimonials from your existing customers? Insert direct quotations from these testimonials. Have you received any prestigious industry awards? Make sure your pitch refers to them.

The Importance Of Video

Once your campaign is live, one of the most important things you will need to have is a 2-to 4-minute video. “Apart from leveraging their own networks, the one thing that is most effective towards having a successful campaign is having a strong video. It should be short and compelling. People need to be able to see and hear the passion from the founder’s own voice,” says Ken Nguyen of Republic.

Most people prefer to watch things rather than read them; therefore, your video is the first thing most people will watch. You need to capture their attention within a few seconds so that they will be interested in investing the further time to read about the rest of your offer and do not click away from your page, never to return.

Practice! Practice! Practice!

Practice with friends – ones who know as little as possible about your business. Give your pitch, and then see what questions they ask you. Also, you should ask them questions to test whether they understand what your business does and how it makes money.

Anticipate lots of questions from investors, and practice your responses in advance. Above all, learn how to think from the investor’s perspective and you should do well in communicating your credibility, and getting people to trust you with your hard-earned money.

Get the very best insights from successful crowdfunders from around the world. My book "Equity Crowdfunding" is out now on Amazon.

Need results fast? You can work with me one-on-one. Whatever stage you are at - investigating crowdfunding as an option, forming your strategy, or even if your campaign is already live, there's a package to suit you and supercharge your results.

About the Author

Nathan Rose is the founder of Assemble Advisory, a consultancy for equity crowdfunding. We help busy company founders get their information memorandums and financial models in order, and provide advice on structuring a successful equity crowdfunding campaign.