Who is 'the crowd' in crowdfunding?

Crowdfunding is often seen as a different type of fundraising to say, raising angel investment or, the family and friends round. I find it so frustrating when I hear business leaders say, ‘we want to secure a few angels first, then we’ll top up via crowdfunding’. Even when raising all the money under the same terms, all part of the same round, they see the ‘angel’ part and the ‘crowdfunding’ part as separate. So are the angels coming into your round not part of the crowd then? 

Crowdfunding campaigns are not exclusive to angel investors. To crowdfund simply means you’re opening the round-up to everyone. Angel investors, family, friends, customers, general HNW individuals within your network… everyone! To go into a crowdfunding round with the mentality that the ‘angel’ part and ‘crowd’ part are separate, to me, is bonkers. 

When you embark on a successful crowdfunding raise, to work efficiently, there is SO much you can be doing alongside talking to angel investors to ensure that when you extend the invitation to invest beyond angels, the round fills up quickly and is oversubscribed. 

When crowdfunding, you want a plan that prepares your business for all of the different types of investors that will come into your round simultaneously. 

So who is the crowd? Here are some of the main groups of individuals you will see investment from if you crowdfund.

Angel Investors

• I’m talking about seasoned investors here. People who often invest for a living either full or part-time. Newsflash though, these are not usually the first people to jump in. Another reason why targeting angels first is bonkers to me! You could be making so much progress with the other groups first. Progress that will actually serve as validation to Angel investors when you do pitch to them. 

Friends and family (F&F)

• It’s rare that a crowdfunding round won’t include friends and family of the business's team. In fact, often these people are your lowest hanging fruit and we would advise clients that if they haven’t already, they should follow a decent plan to explain to F&F how they can access the opportunity too. Even for later-stage funding rounds that wouldn’t traditionally include friends and family, the same rounds held on crowdfunding platforms often see friends and family jumping in too. For those of you reading this who are feeling like they wouldn’t want to ask friends and family for money, remember you’re not! You’re presenting a business opportunity to them and they can take it or leave it. Why offer the wider public the opportunity to make money from your success but not your own close personal contacts? So long as you let them know their capital is at risk and they’re prepared to take that risk, then let them make their own adult decisions, and if they wish to, invest. 

Read this blog for more on this.

Your Linkedin Network

• The potential to raise funds from Linkedin is huge. If you’re not very well connected on Linkedin yet, it doesn’t mean this network can’t be lucrative. With the right strategy you can also target 2nd degree connections. We’ve had clients raise the majority of their round via a decent Linkedin strategy (the one we give to them). The sooner you can start to work on this part of your crowd the more successful you will be. 

“The biggest game changer for us was the bespoke LinkedIn training”  - Read more on this from Client Straight and Narrow Drinks here. 

The platform’s crowd

• The crowdfunding platform you choose will have a large community of investors. You should absolutely expect for your crowd to be made up of some of these people. BUT, these people are followers, not leaders. They’re only going to invest if they can see that the round has already begun to fill nicely from the above groups of individuals. So, don’t approach a crowdfunding platform expecting to raise the whole round from their network, it won’t happen! However, just because this group are usually the last in, doesn’t mean there isn’t loads you can do ahead of going live on the platform to ensure you stand out to this group of individuals.

If you’re considering crowdfunding, please consider the round to include all of these groups from the start. A good crowdfunding strategy should not involve targeting any of these groups in isolation. You need a multi-pronged approach. For access to a step-by-step, start-to-finish communication and content creation strategy that will help you to raise as much as possible from as many people as possible within each of these groups, apply for a call with us via the big yellow button below.

Written by Kirsty Ranger, CEO, ISQ.