Equity crowdfunding, you’re NOT asking for a handout

We often speak to people who are nervous about ‘asking friends for money’, and frequently hear ‘I’m a bit reluctant to ask for a handout’....I'm here to tell you, with equity crowdfunding, that is NOT what you’re doing. Here’s why… 

Investing into a crowdfunding campaign is investing into the growth of a business - have they got a strongly validated business opportunity? Does the business have year on year growth? Is it a relatively popular sector? Have they got a strong team in place? If the answer to any or most of these is yes, then there should be every chance this company will benefit from a crowdround, a cash injection taking them from A to B. 

Whilst it’s totally understandable that people are worried about the financial situations of their friends, families, customers, professional networks etc, opening up the opportunity to buy shares in your company isn’t actually about ‘asking’ anyone for money. When you’re preparing an investment round, you’re preparing to present a business opportunity. Whether you’re asking a VC, a fund, a group of angel investors or your friends to invest, it’s still an opportunity - and that’s what you need to be able to portray - in your comms, your deck, your social media posts. The way you talk about this proposition is vital to the success of your funding round. 

Obviously investments of this kind do carry risk. However, why not treat people with the respect you have for them and give them the benefit of the doubt that they can make their own minds up? With the relevant risk warnings in front of them, and they will be, shouldn’t people be allowed to assess that risk themselves and make their own decision as to if they can afford to invest? If they say no, then don’t worry, at least you offered them the chance. 

 'When you’re preparing an investment round, you’re preparing to present a business opportunity. Whether you’re asking a VC, a fund, a group of angel investors or your friends to invest, it’s still an opportunity - and that’s what you need to be able to portray - in your comms, your deck, your social media posts. The way you talk about this proposition is vital to the success of your funding round.'

Equity crowdfunding has totally democratised the investment landscape in that it has allowed ordinary people to share in the success of some truly brilliant companies that, until 10 years or so ago, you would never have had the opportunity to access. Yes, some companies that have raised on equity platforms have fallen by the wayside and people have lost money, and others have done fantastically well, meaning professional and everyday investors alike have seen and will hopefully continue to see a return on some of their investments. 

 'Equity crowdfunding has totally democratised the investment landscape in that it has allowed ordinary people to share in the success of some truly brilliant companies'

Reputable platforms don’t just let people part with their cash, this isn’t some sort of scheme to fool people. The platforms perform due diligence, identity checks, and people are required to provide tax info, to read risk warnings and to certify into their investment class. These platforms are set up to help ordinary people join in with the fun if they can afford to, alongside the professional investors who are also registered.

Equity crowdfunding is about opening opportunities to the masses so please, don’t launch your campaigns and then make assumptions on other people's finances. Don’t deny them the opportunity to assess the risk themselves and share in your success if they want to. And if you’re already in the process, but need some support in putting together your collateral and need help with your messaging - get in touch with us.