Michelle Beyo, Advisor, Payments and Financial Inclusivity
July 17th, 2020
Michelle Beyo is Founder & CEO of Finavator INC, Money2020 RiseUp Alumni, Women in Payments Glob[...]
How I Raised $1 Million in 30 Days with Equity Crowdfunding
Entrepreneur | Murray Newlands | Dec 3, 2019
You can raise a million, too. Here's how to be successful with equity crowdfunding.
There's an art to raising money for a startup. I recently joined Commerce AI as Chief Strategy Officer, and my role has two main functions: fundraising and marketing. My goal in the first 30 days was to raise a million dollars from crowdfunding. This can be a viable goal for your company as well. Here’s how.
Equity crowdfunding
Under the Jumpstart Our Business Startups (JOBS) act, there are a number of routes to crowdfunding. The starting point is a Form C round, which in essence means you can raise $1.07 million per year -- yes per year -- from non-accredited investors. This means anyone can invest over $250 at a time. This time we worked with accredited investors only but most people will start with a Form C round.
Architecting a New World: Investment Crowdfunding and Digital Assets
This model is like Kickstarter, but you give backers equity rather than a product. The equity can be a convertible note, a safe note or a fixed price round. If your goal is to raise more than $107,000, an independent CPA must review your company's financials for the past two fiscal years, or since incorporation.
Aligning the stars makes millions
You need to make sure that your startup is ready for fundraising. Smart investors on crowdfunding platforms look for a few key factors, and we had some of those.
It is all about the story. Investors want to invest in a company that is going to be a billion-dollar company. Do you have a credible path to becoming a billion-dollar company? For example, our CEO and founder had a successful previous exit. People like to back winners.
A strong team is also important. Ours is comprised of Stanford and MIT PhDs who have been working on AI technology to solve really hard problems.
Initial product/market fit is another thing investors want to see. We already had substantial revenue from major brand name customers like Unilever, Walmart, Rakuten, USPS, Chanel, Midea, Netgear, Cisco, and Coca Cola.
A sales process that’s growing that list of customers is also a big plus. We were nearly at break-even last quarter, which assured our investors that their money is safe with us.
No company can have all the boxes checked. But the more positive signals you have for investors, the better. Investors want as close to a sure thing as possible.
When fintech met crowdfunding
Creating a winning campaign
Several good equity crowdfunding platforms are available, such as StartEngine and Republic. We chose to use SeedInvest.
It’s important to create a convincing writeup and video explaining what you do and why people should invest. You should think of this as a landing that advertises your product, only you’re selling to investors rather than customers.
We focused on selling the opportunity and potential of the company, not the product. You might have an ingenious widget, but will your business become a billion-dollar company? It’s a big market out there, and investors need to be convinced that you’re going to be the winning business.
Pre-seeding the campaign
Because investors like to follow other investors, we pre-seeded a winning funding campaign. How? We had some investors with larger checks lined up to invest in the campaign. This enabled us to show strong initial traction when we launched. It also helps that crowdfunding platforms highlight companies that are gaining traction. This leads to attracting even more investors.
Getting In Early: SEC Sees Growth In Equity Crowdfunding
Always improving
Your campaign is never “done.” We kept working hard on improving our story. As a startup seeking investment, your goal is to sell your company’s potential for future growth. Getting that story absolutely right is very important. You should be practicing, thinking and brainstorming your story with as many people as possible. It should be something you’re always trying to improve.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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