Pitch perfect: How to inspire equity crowdfunding investors
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Equity crowdfunding can give digital businesses an attractively practical, simple and direct way of securing the capital they need to start up or grow.
By showcasing their business online to a nation of 'armchair investors', who invest as much or as little as they like in return for a share in the business, entrepreneurs are able to bypass traditional hard-to-access sources of support and avoid the associated costs and complexity. Here are our top tips for developing a pitch that will get you noticed, and help you engage with potential investors.
Make your pitch compelling
Keep it clear and simple, and give investors the information they need to make a decision. Explain what your company does and who for, how the market works, what you'll use the investment for and your exit strategies. Investors wait for opportunities that inspire them, so inject some enthusiasm and life. When we surveyed our registered investors, more than two-thirds said "being personally moved by the idea" was a leading factor when evaluating a venture for potential investment, along with market potential and the founder's experience.
The crowd angle is a hearts and minds piece as well as a pure investment proposition, so we told a story rather than just presenting the financial nuts and bolts.
Rob Symington, Escape the City Provide detailed business plans and financial forecasts There are no set templates, but consider including an investor slide pack and case studies as supporting material. Get personal Part of what investors buy into is the entrepreneur's story; so give them something to relate to. Tell them about yourself, your history and expertise, and what excites you about your business. Many crowdfunding investors are keen to support businesses that share their values. Think about using video to get your personality and passion across.
Be ready for questions Interested investors will often ask an entrepreneur questions directly through the website. This forms an important part of the "crowd" ethos as investors bounce comments off each other and discuss the pitch's merits. Stay on top of the flow and endeavour to answer questions quickly, clearly and concisely.
Sign up for tax incentives Registering your company with Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) gives investors substantial and attractive tax breaks - up to 50 per cent for SEIS and 30 per cent for EIS.
Get real Don't be over-ambitious with your target or put people off by overvaluing your business. Ask for only the amount you need, and explain why you need the money and exactly how you'll spend it. Whatever method you use to value your business, justify your valuation.
Hit the ground running Getting the first 10% of your target is the hardest part, so start warming up potential investors today - tell your friends, family, customers, suppliers and others. Early momentum is a really important factor for success; a pitch will attract more interest if it's already managed to secure a decent chunk of the target.
We spoke to family, friends and angels who had indicated they wanted to support us and asked them to put their pledges onto Crowdcube as quickly as possible after we went live. This approach really worked as we built momentum quickly, and saw that all important progress bar getting closer to its target. We not only achieved our target, but went on to overfund (raising £70,000 in total) in just one month.
Hatty Fawcett, Founder, Seek and Adore
Keep talking . Keep investors and pitch followers (sometimes over 100 people can follow a pitch that they want to track) abreast of developments. Publishing regular updates can be a powerful way of converting interest into investment. Don't limit yourself to online activity; get out and talk to people face-to-face. Since launching in 2011, more than 125 businesses have raised over £27 million through Crowdcube, which now has over 75,000 registered investors.
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