Guest post: Jamie Migdal is the Founding Mom of FetchFind, a business which connects pet owners with the best pet resources. Here, she details the decision to turn to equity crowdfunding, and the tips, tricks, and turns along the way. (Spoiler alert: She doesn’t regret it. Not for one second.)
After you’ve been bootstrapping your startup business for a year or two, it could be time to take stock and decide if you’re going to start fundraising in earnest or (depending on your runway and revenue) pack it in and move on to a “regular” job. It’s a crossroad that entrepreneurs face at some point, and until fairly recently, your only real option for fundraising after the “friends and family” round was labor-intensive, one-on-one investor meetings.
But after the passage of the JOBS act in 2012, equity crowdfunding became an option. You’re undoubtedly familiar with other crowdfunding platforms like Kickstarter or GoFundMe, but equity crowdfunding allows you to take numerous small investments from non-accredited investors to reach your funding goal.
Earlier this year, it was time for me to explore my path to seeking investor funding to continue to accelerate the growth my business. On the heels of several traditional investor meetings, I started researching alternative funding options. After talking to other entrepreneurs and investors at 1871 in Chicago, I decided to go with equity crowdfunding.
As it turned out, that was the easy part! There are a lot of equity crowdfunding platforms out there, with more springing into existence every year. The last thing I wanted to do was get involved with a shifty organization who would devour my already-nonexistent time and deliver nothing in return but high fees, loads of frustration, and (possibly) a failed business.
The Search for Equity Crowdfunding
The best way to find the right equity crowdfunding platform is word of mouth. But before you start talking to your fellow small business owners and calling the company admins, you’ll want to have a list of questions in hand to do your online research. Some of the things you need to find out before taking the next step include the following:
- Platform model
- Variety (in terms of stage, industry) of deals
- Platform terms (management fee, carry etc..)
- Terms of deals (valuation, pro rata, types of shares)
- Product options
- Analysis/commentary on deals
- Administrative support (customer responsiveness) to investors
- Access to founders
- Quality of co-investors
- Updates on the company
- Exit/closure and other support during the life cycle of the investment
I gave myself two months to get the research phase done before I picked up the phone and started calling the various platforms. On my final spreadsheet, I had information for CircleUp, Crowdfunder, Republic, SeedInvest, OneVest, and Fundable. After multiple conversations with my top two choices, I ended up going with Republic.
Tip: Create a spreadsheet so that you can more easily compare the offerings.
The $^&$%#! Files
Then the meaningful work began. And by “meaningful” I mean all-consuming, frustrating, enlightening, and soul-scouring. You’re going to do more crying and screaming than laughing. It’s during this phase that you might discover your files are in disarray, your numbers haven’t been updated, and it takes an unconscionably long time to find things. (That’s because you’ve been too busy running your company to set up a proper filing system.)
As an office, we busted our collective hump for weeks just to get past the first phase of the process. Our goal here was to get the numbers together so that we could hand them over to the accountants and lawyers recommended and vetted by Republic. We had to become GAAP certified in order to file our Form C with the SEC. All of that can be happening in the background while you move onto the pitch prep phase.
Tip: Set up a project management system, like Trello or Asana. Your platform admins will almost certainly have one that they will use to keep YOU on track, so it’s easier if you can use the same one. You will not be able to keep track of the thousands of details without a proper management system.
If you think you can just use the same old pitch deck you’ve been using for one-on-one investor meetings for the last couple of months, surprise! You’ll have to tear that apart and reconstruct it with a more general audience in mind, and it will have to grab their attention immediately. It will need to be clever, snappy, and concise. You’ll need bold graphics, great pictures, and perfect words.
To go along with the pitch deck, you’ll need to do a video. Find your videographer first (your crowdfunding coordinator will be able to help you with that if you don’t already have one; we used the NYC team DreamItReel, and they were amazing), book a date, and talk to them about what you need to do before they start filming. You’ll need to write a script, find locations, source your participants and script their testimonials, and hire a professional makeup artist (please trust me on that one.) Your goal should be a 2-3 minute finished product; for that, you’ll end up filming at least 6 hours of footage across a number of locations.
Tip: if you’ve been using the same pitch deck template since you started your company, find a new one. It will help you to think about the presentation and the message in different, fresher ways. We used Google Slides, which has a nice collection of free templates.
The Other Bits
In the grand scheme of the pre-launch endeavor these are fairly small tasks, but they are no less important:
Get all of your press mentions together in a media spreadsheet/folder. You’ll need this for the crowdfunding campaign page.
Get a landing page built for your website. And, while you’re at it, update your website and apps on both the front and back ends. (If you don’t have a developer/designer/website manager on staff, you’ll need a dev shop. I highly recommend 8th Light.)
Put together headshots and bios of everyone in or connected to your company, including staff, advisors, and board of directors.
Get your email lists together. These will include the individuals, groups, and communities that are in your industry, business, and general friends and family orbit. These are the folks who will help you get that early investment traction. This surge will pull in their networks, and so on and so on. Momentum is key.
Start setting up your social media plan. Again, your crowdfunding coordinator can help you with this. You’ll need multiple sets of graphics, text, and links to keep things interesting. Your best friends during this process will be sites like PicMonkey, Canva, Pixabay, Shutterstock, MeetEdgar, and Hootsuite.
Write a press release. Actually, you’ll want to write two press releases: one to announce the launch of the campaign, and one to announce when the minimum goal has been met (the second one will get you over the mid- or late-campaign slump and help you to a strong finish.)
Set up podcasts and webinars. Again, your campaign coordinator can help you with this if you don’t already have an established podcast/webinar process. But you should get your guests set up a few weeks in advance. You can also do Google Hangouts or Facebook Live to generate buzz.
Set up your company email signatures with a link (to your landing page) and a tagline. It’s a quick, easy, and omnipresent Call to Action. Here’s mine:
Believe it or not, everything I’ve written above is a short version of everything you’ll have to do to launch a successful crowdfunding campaign. After months of hard labor, you’ll be ready to launch. Take a breath, take a nap, and get right back to work, because it’s not over until it’s over.
A crowdfunding campaign is a marathon, not a sprint. After that initial surge of investments, you’ll hit the doldrums at least once, and it’s nerve-wracking beyond words. That’s when you have to send out second, third, and even fourth rounds of emails and ads. One of the most frustrating things I ran into during our campaign was that people were holding off on investing until the minimum goal was met. Gah! You’ll need to be very vigorous in your outreach to turn those verbal commitments into dollars.
For me, this experience illuminated every aspect of my company, widened my network, and delivered me from fear. In fact, I think fear is the only thing that holds us back from greatness. It sounds obvious and perhaps trite, but if you get quiet with yourself for a few moments, you will most likely identify that as your only roadblock. And once you do, and you spend a dedicated amount of time acknowledging it and honoring it… face that shit head on and give yourself permission to be vulnerable and great. For me, equity crowdfunding did all of that… and so much more. Best of luck. Always.