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Guest Blog: Securing finance - Top tips for successful crowd funding
When looking to raise any capital, business owners should put themselves in the position of the people they’re asking to invest or lend and approach their pitch from that perspective. This is especially true in P2P lending, where there are no bank lending quotas to hit and everything is viewed objectively. You can have a great experience and earn the trust and admiration (and cash) of people you have never met if it goes well, and providing the business is a good one, you’ll get out of your campaign what you put into it.
Before the application, businesses should ask their accountant to prepare up to date accounts. Almost all the insight a platform gains is through these, and poorly presented accounts will cause delays and likely result in an initial rejection.
In the equity crowdfunding market, platforms increasingly talk about the need for businesses to ‘bring their own crowd’ to the pitch. This plays on the herd mentality and can encourage others to follow suit or just view the information in a slightly more positive light. Whatever the rights or wrongs of this approach, it could also be used as a way for businesses to formalise an agreement with someone who has previously offered to invest. On rebuildingsociety, we’ve seen friends and family lend to businesses, earning a return, but lowering the overall repayment rate and showing public faith in the auction.
Once accepted for a space on a live marketplace, businesses should sense-check their profile. This has been called the ‘granny test’ in the past – essentially it needs to make sense to people who are not blessed with intimate knowledge of your industry. People respond well to different media, so consider a video alongside text or audio, either a corporate video or a short monologue introducing your business and why you believe it will be a future success. People lend and invest to get their money back, so be sure to emphasise this.
When a business is live on a P2P auction or an equity crowdfunding pitch, there are a few golden rules to obey. Responses to questions must be prompt and honest. If businesses take several days to acknowledge a question or deliver a one word or vague response, it negatively affects the person who has asked the question, and the hundreds of silent investors that prefer to monitor points raised by others.
Questions can get a bit lively too, so keep calm and ask a colleague or friend to review your answer if you sense a confrontation. Staying calm under pressure is exactly the sort of trait investors are looking for, so the wording on questions can be deliberately spiky.
It goes without saying that you will need to market the pitch, so take every opportunity to mention it to people that have supported you in the past. Social media is a great way to raise awareness, but a phone call or a face-to-face meeting is probably the best way of winning firm support, so try to set time aside for this too.
We’ve had business owners who have told us the whole process was empowering and rewarding and they’re more confident in their business now after winning the support of hundreds of investors.
If it was too easy, everyone would succeed, so be thorough in your preparation and professional in your approach. It might be the best business decision you’ve ever made.
Guest blog by: Nick Moules
Marketing & Communications Manager rebuildingsociety.com
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