Preparing your startup for Equity Crowdfunding

by | Aug 18, 2017

With the launch of South Africa’s new Equity Crowdfunding platform Uprise.Africa, startups are gearing up to get involved in an exciting alternative way to raise capital. However, running a Equity Crowdfunding campaign can be hard work. Behind every successful campaign lies hours of preparation and dedication. Entrepreneurs who are prepared, committed and motivated to the Crowdfunding process have the best chances at raising the capital they need.

Assess if your business is right for an Equity Crowdfunding campaign:

Look at your business from the point of view of a potential investor. Is it a viable business model? Do you have validation that your market will consume your product/service? and most importantly, is your business model profitable?. You need to remember that an Equity Crowdfunding campaign involves presenting your business to the public. Is your business ready to be presented to potential investors?

After assessing if your business is right for Crowdfunding and you feel you are ready to present to potential investors there are a couple of important things you need to do before you start an Equity Crowdfunding campaign.

Your Story

The story you include in your campaign should be both compelling and memorable. Your story is a verbal presentation of your business and your journey, it should also include reasons why your business is a viable investment opportunity. It would be wise to explain how your business is profitable, how it competes in the market and how it will sustain itself. You need to spend time thinking it through and interrogating any holes or missing narrative.

Your Network

Building a following network before you launch will be largely beneficial for the first few weeks of your campaign. Having some financial backers lined up before your campaign starts helps kick off your campaign and create momentum right from the start.

An existing network will also give you an advantage in the early stages of marketing your campaign. An existing network contributes to your campaign by, (1) giving yourself and your business credibility, it shows you have worked to build up a following and that you have a base of people that already believe in you and your product/business. (2) It shows that you are invested. By including your friends, family and personal network, you will show that you are willing to do your best to make your business a success because you will be accountable to the people who know you. (3) Having a base to start off with helps with the amplification of your message, accessing the followers of your network and so on and so on.

Incorporating relevant online platforms such as your company Website, Facebook, Twitter and LinkedIn will help advertise your offering and get the word out to your crowd. Having a campaign marketing strategy in place before you start your Crowdfunding campaign will be beneficial in helping your campaign receive a higher reach and gain early stage momentum.

Your Video

Behind every successful Crowdfunding campaign is a well put together video. A campaign video is an ideal way to address your potential investors and introduce your brand, partners, product and financials to your crowd. Ideally your campaign video should be a visual representation of your investor deck and should not exceed 3 minutes. Once again you will need to look at your business from the point of view of a potential investor and think about what would make you excited to invest in a business like yours. Investing time and money in having this professionally put together will be largely beneficial, remember you need to hold the investor’s attention

Your business plan

A well put together business plan forms part of the essential documentation every startup needs before starting an Equity Crowdfunding campaign.  You should prove to your potential investors that your business is innovative, profitable and sustainable.

Your Finances

Preparing your finances before you start a Crowdfunding campaign will be largely beneficial. Setting aside a campaign marketing budget, video budget etc will ensure the content you produce for your campaign is of good quality.     

Having your finances in order is also important when preparing your business to offer shares in exchange for investment.  You should prepare financial documentation for your businesses past and projected future.

Really think about what you will need for your campaign  so that you have enough funding to achieve your goals. Be realistic, experienced investors will see through unrealistic or non collaborated estimates and forecasts.

Choosing your platform

 When selecting an Equity Crowdfunding platform to host your campaign it would be beneficial to vet the credibility of the platform. Check whether the platform has all the necessary legal compliance documents in place and has established risk and privacy position statements. You are entrusting the platform with your finances and should as a result be asking questions around whether or not they do fraud checks and are legally bound by the agreement between themselves and the user.

You also need to consider where your backers will come from, considering the relevance of your product/target market and banking costs for international transfers and legal agreements.

The above pointers form the basic foundation for Entrepreneurs when preparing to start a Equity Crowdfunding campaign. Entrepreneurs looking to raise capital through equity crowdfunding can register their details on www.uprise.africa or send an email to info@uprise.africa.

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