How to Market Your Equity Crowdfunding Campaign without a Budget

No budget? No problem! Our Head of Business Development Thomas Smith shares his ideas and best practices for building momentum for your Equity Crowdfunding Offering.

He even has insider tips on how to pitch the investment to early investors.

He answers questions from our audience, including:

• How to market your offering without a budget
• How to tell a compelling story to early investors
• The importance of finding a lead investor or a group of small investors to build momentum
• Messaging that resonates with early retail investors

So get up from your desk, go out for a quick 10-minute walk, and listen to our latest fundraising tips for your startup!

If you want to raise capital for your business visit us at https://netcapital.com/

Transcript

Kathy Kraysler: 0:00

Hi everyone and welcome to Funding Innovation with Net Capital. Today we're speaking with Tom Smith, our head of business development, and he's answering questions from our issuers. Tom, our first question is from an issuer who says he's getting a lot of industry press, which is great, but he wants to know how he can leverage that to market his offering.

Tom Smith: 0:21

First off, things like that again goes back to eyeballs and people that are already interested in the industry and as it pertains to your business. So, typically the way and having done this for a number of years now we've seen it done very effective on those industry-based whether it's magazines, articles, publications and obviously explaining the company and saying, oh, by the way, we've opened up around for the community to invest and now's your time, right and then embedding that offering in any type of article that's syndicated. It's one of the biggest things that I think can really help a campaign. My second client at Net Capital and this was going back to 2020, and they did not have a budget for marketing and I hate to say it doesn't cost anything because everyone's time is worth money but they were bullish on utilizing their time and getting their offering in as many different publications and getting on as many different podcasts and anyone who would listen to their story, and they raised a million dollars with us in just under three months. So things like that can really help leverage and you think of it right, because there's early adopters and hopefully there's friends, family, colleagues, folks that you know that want to support you. Then you have the side of people that are interested in the business and then the Net Capital's network right. So as you start to gain that momentum, it's the flywheel effect and then people start seeing that proof of concept and you'll see the momentum pick up with folks investing and coming on board.

Tom Smith: 2:08

So I exited my last business. I was an entrepreneur and founded and exited three businesses before I got to Net Capital. Two were successful, one was not, which is how I heard about Net Capital and when I think about it and having fundraised now for going on 15 years and most of the for-profit and non-profit space, a lot of people don't know how to get involved in early stage financing. So there's a big educational component to this and our goal is to be able to offer access to anyone and that early stage investment opportunity and I just feel like the more you can syndicate and offering and educate people that you can invest, the more likely you are to be successful. And it just goes back to eyeballs.

Kathy Kraysler: 2:56

Tom, I've worked with you all these years. I never knew that about you. I had no idea you had those exits. Thank you for sharing that. The same issuer has a follow-up question, which is that he's getting pushback from PR. They don't think that the equity crowdfunding is a compelling story. What's your take on that, Tom?

Tom Smith: 3:14

Yeah, and I think, like and again, this is my personal opinion when I think of our space, crowdfunding can mean a number of different things. I remember when I first started it was like, oh, you guys are somewhat a kickstarter. It's like we couldn't be more different. And positioning it that this is a community round where any serious investor can't say no right, because the minimums are $100, and saying we don't know if we're going to do this again. Like, this is our community round where we want as many people to participate, and then you add those extra layers to it. I've seen it go well in so many different ways. When you can really find that niche with the marketing and getting people excited about what you're doing and anytime you can do well by doing good, I think is an absolute home run.

Kathy Kraysler: 4:05

Thanks, Tom. Our next question is from a woman who says she's a woman-owned business and she's having trouble finding a lead investor. And how important do you think it is to find a lead investor?

Tom Smith: 4:17

Yeah, great question, yeah, so I think it's one of two ways that you can look at this, because obviously, with the dollar amounts that go up, like bigger checkwriters are harder to find. If you can do that, always a benefit. I think that the most common way is to say okay, because what? When you allocate a million dollars for fundraising, it can seem, oh my god, a million dollars, it's a lot of money, right. But when you start to piece together like, okay, what's the. in my network, what's the path to a hundred thousand dollars? Is it 20 people at $2,000?, Is it 10 people at 10, or is it five at 20? Or is it 100 people at 100? And I think like breaking that out, because success drives success in our industry. So my short answer is anytime you can find a lead, it's always a plus, However, the most common is to build up those maybe smaller checkwriters and, like what we're seeing with our industry is companies that are using us are thriving in three different areas. What's always been the case?

Tom Smith: 5:34

The non-accredited investor In this fundraising climate. We hear this all the time. Oh my goodness, I'd love to invest in your business but I can't hit your company minimum. Well, that's why I hired net capital, because typically you put it at 25,000 or maybe a little lower, but you're not going to scatter your cap table with a thousand thousand dollar checkwriters. So non-accredited, accredited, the . company minimum or really any non-strategic investor.

Tom Smith: 6:02

The way I look at net capital is we, if you go on your Fidelity account and buy Apple stock, that's what we're doing for your company no board seat, no advisory roll, everyone's bundled together, one line on the cap table. Right, You've heard it a couple times. But I really think like focusing on it like that, we're like all right, if this person were to write me a larger check and I do receive the funds. They believe in the business, they're going to get that equity component. And then if someone wants to do a side agreement, there's nothing that pertains you from doing that. But typically it would just be that, okay, I invested $50,000 at a dollar share, I get 50,000 shares. But really focusing on it like that in this fundraising climate, I think is at least where I sit has been a common theme of folks that I'm talking to.

Kathy Kraysler: 6:46

And Tom, we often get asked what kind of messaging is the most effective for outreach for your equity crowdfunding campaign?

Tom Smith: 6:54

So I always tell folks we're not selling the product, we're selling the investment opportunity. Difference. Right? I'm being an entrepreneur myself. I think we're so passionate about what we do and I think it's purpose of the investing. And obviously, if someone has to believe in the product but, like people, invest in people, second is okay, this is what we're doing, this is the problem and this is the solution in our industry. And then, third, is that market opportunity right? The advantage here is investors are going to be able to invest in an early stage with the hope that the company continues to grow and there's a really nice return there. So I just think that sometimes people like you're very much selling yourself. It's like do I like the person? Can I trust the person? Can I make money with the person? And that's why we highlight the team on our offering pages. Thanks, tom.

Kathy Kraysler: 7:42

Now here's an interesting question from an issuer who's about to launch on net capital and he wants to know if he should issue safe notes before his campaign.

Tom Smith: 7:55

Yeah, I think again I want to be vague here, but it's not a one-size-fits-all. I think the best way that we've seen is unless the money is imminent and like the businesses in jeopardy going out of business before the campaign launches which our hope is that that's not the case and it's typically not is pushing everyone to build that momentum for when you launch your crowdfunding campaign and being strategic about it, because we have coming on a nine-year body of work of what works for clients and what doesn't, and always the overarching theme is that momentum piece of clients that do well versus clients that maybe are a bit slower out of the gate, and so I think really focusing on that launch, unless there's an unusual circumstance, tends to be the best for the folks that do really well.

Kathy Kraysler: 8:55

Its next question has to do with whether we have any stats on the best and minimum investment amount to ask for.

Tom Smith: 9:02

So typically all of our minimums are $100 that someone can invest in our companies.

Kathy Kraysler: 9:07

And then, as a follow-up, how much should you be asking your friends and family?

Tom Smith: 9:11

It's just taking the temperature on the folks you're reaching out to. Is it a five-figure group? Most likely it's going to maybe be somewhere in the four figures 2,500 or 5,000 or 1,000. And so some folks it's like hey, we want to get a couple hundred dollars from everyone and I think a big component here and when the SEC changed the rules, you know it's really any form of payment, a lot of money you can go from your net capital wallet. You can debit or credit card People get their points.

Kathy Kraysler: 9:43

Oh, I like that.

Tom Smith: 9:44

You know again. It just reverts back to what I believe about net capital and industries. Any serious investor can't say no, because the minimum is $100. And if someone doesn't have $100 to invest, they either don't want to or they're just not the right person to be asking.

Kathy Kraysler: 10:00

All right. Well, those are all the questions we have this week. Thank you so much, Tom, and thank you everybody for listening. We'll see you next time on Funding Innovation with Net Capital.