10 Things to Know About Crowdfunding
Unfortunately there is no yellow-brick-road to funding. It requires effort and perseverance. That being said, there are always ways to make your fundraising journey easier.
10 Things to Know About Crowdfunding

With all the recent hype surrounding successful Crowdcube campaigns, it’s easy to assume that crowdfunding is the easy route to raising investment. Cut through the noise however, and you’ll find that the latest statistics consistently show that 50% of small businesses fail in the first four years. If raising funds were so straightforward, surely these figures would be drastically lower?

That being said, it isn’t all doom and gloom and with the right preparation, technical skills and expert advice, achieving the illusive “overfunded” label can be possible. As the saying goes, “fail to prepare, prepare to fail.” So before embarking on your crowdfunding journey, here are 10 things you need to know:

  1. Give it the time it deserves

It’s far better to start early and allow yourself some time to rectify any slip-ups along the way than to put out a half-baked campaign that also proves to be an incredibly stressful experience. When we work with clients, we like to work backwards, starting from the money in the bank. Typically, if a business needs cash in 4-6 months time then it needs to start working on a crowdfund now.

Often the biggest pitfall is underestimating how long it can take to secure lead investment and warm up the crowd (anywhere from 4 weeks to 4 months). Not only that, but once the round is closed you have to factor in the time it takes to complete the legal process and receive the money in your bank (minimum 3 weeks from the time your crowdfund closes).

  1. Build strong investment proposition and a story

Contrary to popular belief, if you build it they will not come…enticing investors and giving them a reason to invest is key. Never misjudge the crowdfunding or retail investor, often they can be just as savvy as traditional angels or VCs.

A good story is the best way to catch your investor’s interest. Make sure to clearly articulate your business, your story, why you’re raising money and crucially, the return that’s in it for them.

  1. Invest in your assets (video & investment pack)

With your investment assets out there for the world to see, it’s important to impress. At Raising Partners, we have a graphic designer that works closely with our clients to produce content that reflects the brand’s story. Meanwhile, our investment team ensures your investment proposition is clearly articulated.

The video is equally important as most people will watch this before downloading the documents or reading the pitch text. Some will even invest off the back of your video alone! It’s worth investing time and money into these assets as they are securing hundreds of thousands if not millions in investment for you to grow your business.

  1. Prepare Q&A and updates in advance

Preparation is key. During a crowdfund, the same few questions are asked time and time again. Having a set of answers prepared is imperative especially in times where an online debate could get particularly heated. At Raising Partners, we manage this process for our clients so they can get on with running their business whilst we run the crowdfund. We also recommend you prepare a minimum of 10 updates in advance to ensure once live to the public, momentum is maintained on the platform.

  1. Warm up your crowd

Consider the 3 weeks before you go live as the warm up act to your main crowdfunding event. Just like at a concert, warming up the crowd can be make or break. Answering any questions, sending updates and priming the audience for investment is far more effective than simply sending an email and asking for money.

  1. Make sure you secure lead investment

This area is often overlooked by business owners. We always recommend our clients go to a crowdfunding platform as fully funded as possible and we work to raise as much as 80% of the minimum target ahead of going live on the platform. Remember, this isn’t about asking for less than you need so that you have an easier time hitting your “target”, it’s about raising what you need to grow your business. So make sure you set your target to what you actually need to raise.

  1. Maintain momentum and growth

This is one of the biggest pitfalls we see business owners falling into when raising investment – they spend so much time focusing on investors that they forget to grow their business. This means when it comes to updating investors with traction, they don’t have any key growth stats to show. Instead we take the heavy lifting out of raising investment and hold the founders we work with accountable for growing their businesses whilst they hold us accountable for their investment round.

  1. Don’t assume it will be easy!

Unfortunately there is no yellow-brick-road to funding. It requires effort and perseverance. That being said, there are always ways to make your fundraising journey easier. Namely working with people who have experience in the sector and have developed the specific skills it takes to raise funds.

  1. Leave no stone unturned

We take a “no stone left unturned approach” to raising investment and also when working on a traditional raise or a crowdfund. From reaching out to investors, to updating customers on progress and hosting investor events – you have to put your foot on the gas for the full duration of the raise to give yourself the best chance of success.

  1. Keep your investors engaged post-fundraise

So you made it through to closing a round of investment. At this point it can be tempting to go back to business as usual with your new investment in the bank. However, be careful not to forget the people who made it possible – your new investors. This is especially apt if you have made a promise to keep in touch with them. Think of the future and how much easier it will be to secure a second raise if you continue to nurture and develop the relationships you built during the first one.

Want to know more about how Raising Partners could support your crowdfunding campaign? Click here

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