♞ Crowdfunding

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Crowdfunding

Recently I’ve had dozens of readers ask me to write about crowdfunding. Given the current state of the venture capital market, this seems to be an increasingly popular source of funds, and with a few clients of mine having successful crowdfunding campaigns, luckily, I have some experience and insights here. So let’s dive into some of the top tips I have for those of you looking to raise money through crowdfunding…

1. Pick the right platform - Before you start raising, you must pick a platform. The key here is to look at a few things

   1. Price - Platforms all have different fees and ways of structuring them. Some require cash upfront, others take a percentage of the cash raised, some take a percentage of the equity sold, and many combine these three. Find a price/payment method that makes sense for you.

   2. Network - Some platforms have their own inbuilt networks. They act more similarly to syndicates, with the platform promoting your raise to their network and sometimes even participating themselves. Other platforms simply provide you with the legal and tech resources to run your own fundraise, leaving you 100% responsible for finding and closing investors.

2. Cater your pitch - When pitching to VCs, you are looking to show the high potential of the product and get them to see this as a potential 100x that fits into their high-risk/high-reward portfolio. Most individuals don’t naturally take risks like this; even those like myself who regularly work with and invest in startups have a lower risk profile when investing our own money than a VC. This means your pitch should focus much more on attracting customers to invest than investors. Sell the problem and sell the emotions.

3. Be loud - A common mistake I see with crowdfunding is founders not wanting to be too “loud’ about their fundraising as they fear that it will look bad if they fail. The reality is that any VC will find your failed fundraise if you have one, no matter how much you try to hide it. It’s much better to be loud and increase your chances of success than to hedge your bets with a silent raise. If you are going to crowdfund then make sure you are all in.

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Onwards and Upwards,

Liam Gill