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Crowdfunding is a capital raising method that gives founders control of their growth journey and enables anyone to become a shareholder in a company they believe in... regardless of their income or investing experience. Crowdfunding raises funds from the public, and therefore relies heavily on a company's ability to create, engage, and attract a crowd.
In this blog we’re going to review the four crowds you, the founder or campaign lead, will have access to during your equity crowdfunding raise with OnMarket.
Crowd #1: Your Inner Circle
Your inner circle are the people closest to you – family, friends, and existing shareholders. This group is your greatest asset! Your 'inner crowd' is the first and most important audience to communicate with. It would be ideal if your inner circle can be the first to invest. Why? Because people follow people – and people who know you are more comfortable to invest in the raise because they’re primarily focused on supporting you. From the perspective of the wider crowd, by seeing X amount of people already invested, it gives them the confidence to pull out their wallet and join the crowd. However, with all that said, if your inner circle can’t invest (for whatever reason), they can still be of great support to you and the campaign! Turn these people into your cheer squad, brand advocates, and ambassadors. Ask them to share your social posts and spread the word – this increases the market reach and gives you the best chance of increasing the amount you raise. Why? Because someone in your inner circle might not invest, but they may know someone who will, who knows someone who won’t, but knows someone who will. Are you starting to see how the crowd works?
Your inner circle is crucial in getting the crowdfunding-ball rolling and building the initial momentum. Gaining initial momentum requires elbow grease, but once the magical momentum has begun, it's much harder to stop. Think about a row of dominos – it takes a big push to knock the first one down, but the collapsing of the rest is almost unstoppable. To get your equity crowdfunding raise off the ground, you need to appoint your inner circle to do some heavy lifting.
Crowd #2: Your Crowd
‘Your Crowd’ relates to your professional and social network – people you have worked with in the past, people you know through other people, etc. Plus the professional and social network of all stakeholder's in your business. The best method of engaging this audience is to leverage the output from your inner crowd. Use the inner crowd to raise awareness about the raise and then leverage the awareness the raise has received to ‘your crowd’. For example, you may use your inner crowd to post about the ‘expression of interest’ period launching. The next day, you may post to your social and professional network the results of the first day of your campaign (ie: the amount of people that expressed their interest).
Throughout the campaign, talk with your professional and social network – not at them. Keep them updated on how the campaign is progressing and invite them to share the campaign or ask questions. Don’t be afraid to directly message someone in your network who you think may be able to introduce you to other people. You should aim to warm this audience up ahead of, but close to, the launch of the EOI campaign. To do this, you can share interesting nuggets about your business to date – or what you are hoping to achieve with your business.
Crowd #3: The Crowd
As hinted in the method ‘crowdfunding’, you are raising funds from the public – aka, the crowd. Beyond your inner circle and your crowd is 'the crowd'. The public crowd comprises of High-Net-Worth individuals (HNWs) and the average person on the street. Engaging investors on both ends of the spectrum is the key to a successful campaign.
How do you connect to this crowd? Through your inner crowd and your extended crowd. The awareness of your campaign generated through these individuals will naturally attract a larger crowd - remember, people follow other people! The capital raised from your closer crowd will give open a gateway of marketing opportunities and leverage points.
The marketing of your raise also increases brand awareness - enabling more people to be familiar with your product. From this perspective, you may find a significant increase in customers, social followers, brand ambassadors, and sales. That's the beauty of crowdfunding!
Crowd #4: OnMarket’s Crowd
OnMarket’s 60,000+ crowd are familiar with capital raising - with some investing in IPOs, some in Wholesale rounds, and many in Equity Crowdfunding raises. Our audience tends to be good at spotting deals they a) believe has potential b) confidently proves is filing a market need – and nothing draws attention like strong investment traction (and great marketing).
Our crowd follows your crowd. For this reason, it's important to leverage your crowd as much as possible... starting with your inner circle. On average, the OnMarket Crowd accounted for 20-30% of all ECF funds raised last year.
Hopefully this blog summarises how the crowd works in crowdfunding, how to leverage individual crowds to amount to a larger crowd, and ultimately, how to maximise the amount of capital you can raise.