Equity crowdfunding has revolutionised the way startups and small businesses raise capital, providing a platform for entrepreneurs to connect with a large pool of potential investors.
However, with so many businesses vying for the attention of investors, it can be challenging to stand out from the crowd.
The good thing is that using paid social and PPC ads has proven time and time again to be a highly successful way of generating expressions of interests and investments.
However, advertising is only the final part of a complex chain of events, which all must be completed to a high standard to ensure the ads reap the rewards of your efforts.
In this blog post, we will outline the 7 must-haves for effective equity crowdfunding advertising.
1 — Determine if Crowdfunding is really what you need
Launching a crowdfunding campaign requires a significant amount of effort, particularly during the raise.
It can be a full-time job that will take you away from day-to-day business activities.
However, when you consider that you are asking investors to provide you with cold hard cash, it’s easy to understand why this level of effort is required.
It’s worth noting that the equity crowdfunding market has changed since mid-2022, with many startup businesses struggling to raise the funds they need.
Investors are becoming increasingly cautious and are less likely to take a punt on a business with an unproven track record.
However, if you are a growth business with a proven revenue stream and a clear path to future growth, you can still do really well in the equity crowdfunding market.
If the need and desire for your product or service is significant, you can still raise a lot of money. It’s all about positioning your business in the right way and demonstrating that you have what it takes to succeed.
2 — Ensure you have the right videos and graphics to begin with
When it comes to equity crowdfunding, having the right videos and graphics can make all the difference in the success of your campaign.
However, it’s important not to jump straight into ad creation without proper planning.
First, ensure that you have high-quality video content that showcases your business.
This should include a 3-minute campaign video that can be used on your platform page as well as social media ads.
Additionally, shorter cut downs of 1 minute and 30-second duration are necessary for different platforms and audiences.
Furthermore, the rise of short-form videos, such as 15-second ‘reels’ style edits, is becoming increasingly important.
It’s recommended to engage an experienced video production agency to handle this or shoot in-house if you have the resources and skills.
Regardless of who creates the content, it’s vital to have good video assets as they are the backbone of your crowdfunding campaign.
A well-produced video can capture investors’ attention, convey your business’s story and message, and increase their likelihood of investing.
Without a compelling video, your campaign may not get off the ground, and you’ll struggle to attract investors.
Take the time to plan and create high-quality videos and graphics, and it will pay off in the long run.
3 — Who is looking after PR?
Another vital piece of the jigsaw is PR.
It’s important to be seen in major news websites, TV news channels, and industry-specific publications during the raise.
However, it’s essential to have a newsworthy hook for your business that is unrelated to the raise itself.
Journalists are inundated with pitches from businesses looking for coverage of their crowdfunding campaign, and unless you’re raising millions of dollars in record time, they’re unlikely to be interested.
Therefore, you need a story that’s worth telling, such as an award you’ve won, a new deal with a high-profile supermarket, or a feel-good story about how your product has improved the lives of thousands of people.
PR is vital to add extra traffic volume during a key period for your business, and it can make a significant difference in attracting potential investors.
You can attempt to do this in-house if you have a good contact book, but it’s often more effective to engage with a tried and tested PR agency in the equity crowdfunding space in Australia.
These agencies have experience in crafting compelling pitches and can leverage their relationships with journalists to secure valuable coverage for your business.
Overall, PR should be an integral part of your equity crowdfunding strategy to increase your campaign’s visibility and reach potential investors.
4 — What about the Ads?
Ah yes, we haven’t even touched on the digital marketing strategy yet, you can clearly see there is a lot to do before an ad is even drafted up.
The first step is to determine which channels you’ll use and how much you’ll spend on each.
While Meta (i.e., Facebook and Instagram) remains the powerhouse in this area, it’s worth considering other paid and organic channels to ensure that everyone knows about your raise.
YouTube Ads, Google Display, LinkedIn Organic (using personal profiles), and Email Marketing are all effective channels to use.
While TikTok is still not suitable for crowdfunding raises, it’s worth keeping an eye on this platform as it continues to gain popularity in e-commerce circles.
When it comes to budget, the amount you’ll need depends on your minimum or maximum targets.
If you’re looking to raise around $1 million, you should set aside around $35,000 during the raise.
However, if your targets are higher, you’ll need to allocate a larger budget.
It’s essential to work with an experienced digital marketing agency that specialises in equity crowdfunding to ensure that your ads are effective and reach your target audience.
A well-crafted digital marketing strategy can significantly boost your campaign’s visibility, attract potential investors, and help you achieve your funding targets.
5 — Finding the audiences
Once you’ve got a platform and a budget to work with, you need to start working out which audiences to target. Generally, these sit in 6 buckets.
- Audiences that know your brand already
- Audiences that know the platform already
- Retail Investors who are investing below $10k
- Angel and high net worth investors who would invest above $10k
- Potential customers of your brand that are interested in investing
- Investors who live near your physical store location
Once you’ve determined how these fit in your business, you need to research the relevant interest categories that match the above.
We would recommend testing between 5-10 different audience segments, monitoring key metrics such as “cost per EOI” and optimising based on the cheapest cost per EOI.
6 — You Still Haven’t Mentioned The Ad Creatives!
This is where you pull together all your resources from step 2, with the addition of brand-themed graphics. We recommend testing 6-8 ads per ad set to ensure there is enough variety without flooding the system with variations.
In terms of copy variations, try 2 or 3 variations in differing lengths and styles and pick the winner. Some campaigns require regional tweaks, others require different ‘hooks’.
For example, will the best hook be one about year-on-year growth, or the social/environmental the product aims to solve? The only way to find out is to test.
7 — Establish who is handling day-to-day tasks during the raise
Once you’ve set everything up for your Expression of Interest phase to go live, if this step isn’t complete, all the hard work could potentially be flushed down the toilet.
Each platform will have its own specific task list needed during the raise, but the 2 most important things to be on top of are:
Submitting the final offer document before the EOI close date. This is the #1 reason why raises are delayed from moving from EOI to opening the offer up officially.
It is a legal requirement for the platform’s legal team to approve the offer document, and if there are delays, it can impact the momentum built in the EOI phase, and have consequences on the final raise total.
2nd of all, it is important you establish with the platform who is responsible for communications with your EOI list.
Engaging with people who have already expressed interest, continuing the conversation and allowing investors to ask questions from you, the business owner, is a much more fruitful exercise than trying to convert a cold prospect at the end of the raise.
Ensure that email marketing sequences are set up to keep the EOI’s up to date with raise progress and milestones, and create a process for investors to speak to you if they have any questions or concerns.
The aim is to build momentum and understand the level of investment you could have before opening to the public, which is really important to start building the ‘winning horse’ narrative, rather than a ‘dead in the water’ one.
Planning and executing an equity crowdfunding raise is a huge task, but if executed well, can raise significant funds for companies looking to take their business to the next level.
Glide Agency has helped raise more than $30 Million for Equity Crowdfunding raises in Australia alone, so if you need a digital partner for your next raise, come talk to us.