Equity crowdfunding presents an exciting new capital market in Canada. Private companies can now offer ownership (equity) to retail investors, or the crowd, for investments as small as $500. If you think that equity crowdfunding might be a good way for your company to raise capital, here are some strategies to consider.
Start the process long before you will need the money. Before your 90-day raise, you should:
- Generate traction through your social media channels. With a broader range of investors, your followers and customers can become investors, creating a network of natural brand champions.
- Generate 25 to 30 per cent of your overall target raise, committed in advance – from friends, family, and close business associates. This provides early momentum and shows potential investors that those close to you believe in your vision.
- Make a professional, compelling, and well-produced video to go along with your pitch. Think of this video as an opportunity to engage new customers and educate potential angel investors about the business opportunity.
- Substantiate and support your valuation. You want to raise the amount of capital you need to get to your next milestones. However, setting a lofty valuation gives you less margin for error as you must execute to continue to drive value for prior investors. Stay tuned for a future blog about an in depth analysis on Valuations.
For early-stage companies who are looking for capital —and most are—it’s important to build early relationships within the investor community. Whether a business is listed in Prospect Lounge for potential future investment, or is listed as a live Investment Opportunity, FrontFundr creates these critical introductions for businesses. We help early-stage companies build traction and establish key relationships with investors and the public, all before you even begin your raise. To get started with a listing in Prospect Lounge, contact Ross Mackay.