Top 5 tips for a successful crowdfunding campaign
Luke Lang, co-founder of Crowdcube, offers his top tips for crowdfunding success.
1. Get the basics right
Making sure you have a sound business plan and robust financial forecasts seems like an obvious one but getting all the necessary paperwork in order should be more than just a tick-box exercise. A good starting point is a compelling pitch that provides a clear overview of the proposition, along with what makes the business unique, the potential market opportunity and the strategy for growth. Any investor will also want to know how and when they could see a return. Great business ideas and ambitious growth plans need to be supported with a clear and concise business plan – it may not be the decisive factor in securing investment but a poor plan could be the reason you don’t get it.
2. Back up your numbers
One of the pitfalls to avoid when seeking investment is failing to back up your numbers. So, make sure your business plan and financials are substantiated with data and rationale which shows how your plans and projections are achievable; it’s essential when securing investment, so it’s well worth spending the time and effort getting it right.
3. Sign up for tax incentives
The UK has some of the most generous tax incentives in the world to help small, higher-risk businesses raise the finance they need. Registering your company with Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) gives investors substantial tax breaks – up to 50 per cent for SEIS and 30 per cent for EIS. It’s a crucial factor when attracting investors so do your research to see if your business qualifies.
4. Engage your own crowd
Don’t underestimate the power of your own crowd – reaching the first 10 percent your investment target is the hardest part, so businesses that are proactive in promoting the raise among their existing network to gain early momentum are at an advantage. So make sure you tell your network of existing customers, fans, suppliers and contacts about your crowdfunding raise, why they should be a part of it and how they can get involved. Getting this right and you’ll have a ready-made crowd of brand advocates and evangelists that can offer you and your business much more than just finance.
5. Make an investment
Crowdfunding, as with any other route to raising finance, requires an investment of your time and effort. There needs to be an energy behind your raise to ensure you maximise the opportunity so be tenacious, well prepared and committed. Investment crowdfunding is an exhilarating experience so be prepared for the ride and enjoy it. Last but not least – good luck!
Since launching in 2011, Crowdcube has amassed an investor community of more than 200,000 people, who in turn have invested over £100 million in start-up, early and growth stage businesses from a range of sectors.