Equity crowdfunding platforms allow customers to own part of a business, whether they’re fans of a brewery or a beach ball brand. This means that startups can leverage the community they have built to help get investment.
Much Better Adventures took this approach to raising investment to the extreme. It hit its crowdfunding target of £750,000 in 72 hours, going on to raise £1.25m. We spoke to founder Sam Bruce to get his advice on running a successful crowdfunding campaign.
How do you know if your business is a good fit for crowdfunding?
As we’ll go on to discover, crowdfunding is easier for businesses that already have a following. This could be a strong email list, lots of followers on social media or paid subscribers. And that’s where Much Better Adventures started its journey.
Over the last two years, we’ve been investing in building our own community. We’ve seen a lot of enthusiasm for our product. We wanted to raise more capital because of our ambitions and there’s something quite nice about having your customers own a piece of the pie.
How to start a crowdfunding campaign
While crowdfunding allows anyone from the general public to invest in your business the easiest people to convert are your existing customers. That means it’s crucial to understand whether they’re likely to invest. Here’s how Sam figured that out.
We gauged interest within our community with an initial email and were blown away by the response. Then we sent a second email saying there seems to be a lot of interest and asking if people were still interested, how much they would like to invest and whether they would be willing to do it before the end of the year. Again, we got a really good response.
The original email’s still on Much Better Adventures’ website. It starts with a clear expression of the business’ mission – the thing that galvanises its ‘crowd’ – goes on to show what they’ve achieved so far and mirrors the tone of the brand. It was sent to 20,000 people and received well over 1,000 positive replies. Sam’s team was advised to expect 10-50% of the people that initially express interest to go on to invest.
That is one key piece of advice, email your network and see not only how many people would be interested in theory, but how much they might be interested in investing and how quickly they can move. That gives you your target for go live, so when it comes to launching you have your initial pot, your evangelists, ready to go on the same day.
Creating a great crowdfunding video
The video you create to go with your crowdfunding campaign is crucial. It allows potential investors to put a face to a name, discover what drives you and understand what the business does.
You could spend £300, but it’s definitely a good investment to shoot a proper video. We worked with a really good, professional outfit that had filmed this kind of video before and took advice from them. Trying to get your whole company plus interviews into three minutes is surprisingly difficult. The whole editing process was a challenge, but it was good fun in the end.
The key points to cover are:
- Explain what you do in a way that’s accessible to everyone
- Include proof of traction (sales, awards, press coverage etc.) and key metrics
- Think about how you can show your product or service in a very visual manner
- Allow your customers (and potentially other investors) to speak for you
Here’s Much Better Adventures’ crowdfunding video.
Communicating during your crowdfunding campaign
Plan a marketing campaign that will provide a series of reasons to talk to people through PR, social media and advertising (although the latter isn’t for everyone). You’re also going to have to be really hot at replying to questions about investing sent directly or through the crowdfunding platform.
Keep communicating with the people that have already backed the campaign and that initial group of advocates. You don’t want to spam them, but tell them when you hit important milestones – it’s this network that will help you spread the word.
Content’s crucial too. Whether it’s blog posts or additional videos, you’re going to need assets to share and enough of them to sustain you for the length of the campaign.
In a four-week campaign, people can get bored of watching the same thing. You need to have a lot of content. We had five-six customer interviews and three investor videos. We were able to put out lots of different videos throughout the month, which kept the marketing fresh.
How much time should you spend preparing for a crowdfunding raise?
Whatever time you set aside to run your crowdfunding campaign it’s clear that preparation is crucial to success; we’ve only talked about the fundamentals and the to-do list is already stacking up.
The prep process is so important. You need to have minimum four weeks, probably two months or so to put together a really solid proposition. We had a detailed deck, know our business inside out and have 10 and five-year plans.
The funding has set Much Better Adventures up for an exciting 2018. They plan to hire seven people and believe it will provide a step-change in the business’ growth.