Fundraising Analysis

crowdfunding strategy : How do we outperform our competitors?

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One of the most popular fundraising methods in recent years is crowdfunding strategy . Providing capital through crowdfunding has provided an opportunity for entrepreneurs was not available for entrepreneurs in previous decades. Of course, this method, like all other funding methods, has its advantages and disadvantages. In this article, we are going to look at how to perform equity crowdfunding. 

What stage is your startup at? Value your startup online with Retiba’s software free of charge.Your startup has crossed Death Valley, and it has had at least 2 funding rounds? Discounted Cash Flows​ (DCF)

What is crowdfunding? 

In crowdfunding, by transferring equity, the business seeks to attract customers in exchange for the transfer of part of its shares to them. In fact, in this way, the new shareholders are added to company and part of the company’s rights and privileges are delegated to others. You’re probably already familiar with this method, or even heard about successful companies that have used it. It may be thought that crowdfunding will lead to the definitive success of a business, but the reality is that crowdfunding is not always successful. This method poses many challenges for the entrepreneur, and if the entrepreneur is not able to manage the situation properly and get the capital he needs, he will actually experience a failure with many consequences. Here are the most important points in the crowdfunding which can be contribute to the entrepreneur to outperform other competitors in the market who, like him, use crowdfunding method. 

The importance of effective communication with the audience in crowdfunding strategy

 The efforts are done to raise the capital as well as the public investors’ attention, ultimately attract some investors without doubts. If you intended to initiate effective relations with them, it is too late. The suitable way is to find your real fans beforehand, find their supports, so then you will have their potential and credibility finding investors. 

Usually, 20 to 30 percent of your capital is going to be provided by the initial sponsors. They would provide the rest of your capital indirectly. Each of your sponsors is capable of finding individuals to invest so that they will join your fundraisers. This credibility, support, as well as influential communications are your main network of individuals that support and provide your intended capital. Usually, social media is a mean to influence attracting more people, expanding your network. 

Advertising Campaign: the A-Priority  

It takes energy and time to manage the advertising campaign, thus do not consider it so simple, or expect it to be a side project to your duties. If you do intend to adopt this method, you should be available for further questions and problems. It would be your main responsibility in this period, providing them with recent information, also being in touch with the investors, so they will be fully aware of all companies’ affairs. Naturally, if investor management were not your a-priority, you would not be successful in grabbing their attention, and support or it would be less, as they would become less motivated to do so. If the investor recognized that his/her presence is not that necessary for you, would she/he be motivated enough to support you? That is obvious.  

What stage is your startup at? Value your startup online with Retiba’s software free of charge. Your startup has had at least one funding round, you are advised to use Multiples method for valuation.

The necessity of companies’ valuation: crowdfunding strategy

If you try to persuade people to invest in a business in exchange for your company’s stock, the value of the company will be the most important criterion for negotiation. The value of your company determines which parts of the company should be allocated to the investor! For example, if the value of your company is 500 million tomans, an investment of 25 million tomans can get 5% of your company’s shares. Meanwhile, obtaining the same share from a company worth 750 million tomans will require an investment of 37 million tomans. 

So in implementing this strategy, the value of your company becomes very important. However, this criterion alone is not sufficient, and other financial criteria that determine a company’s financial condition must be considered. Deciding on an investment is a relatively complex task, and Retiba experts can advise you on calculating these criteria and ultimately determining the benefit of investing in a company. 

Crowdfunding: Marketing plan 

What plans do you have to reach your audience? Which app, site or platform do you want to use and what do you want to offer to offline audiences outside of cyberspace? They are essential questions that you require to respond before starting crowdfunding campaign. Therefore, first, you need to think about your marketing strategy and crowdfunding. To illustrate, based on estimates and calculations, you may conclude that through the media and Internet tools, you can send your message to 10,000 people. Thus, you can get an overview of the future of your capital attraction. Planning and owning a plan will save you energy, time, money, and most importantly, keeping you from putting too much pressure on yourself. 

What are the benefits of investing in your business? 

Your audience is mostly affected by your company’s reputation. What you offer to investors from your company reflects your ideas, motivation, and goals. The most important question springs to your mind is, “What sets your company apart from other companies?” Besides, “What valuable product or service is your company’s result?” However, the most important thing for your audience is to know how they will benefit from participating in your business. So in addition to providing information and business details, your focus should be on attracting the audience who are your potential investors. Perhaps a short, concise story of your motivations and goals can convince your audience that you will truly care about their capital and do your best to make the business a success that they will share in the profits and disadvantages. 

Therefore, in general, it can be said that the main strategy for success in raising capital through crowdfunding is planning, preparation, and commitment. Of course, planning and possessing a general plan for crowdfunding will only be possible when you have an approximate future as well as a prediction of the path you are going to take. Before, it is a good idea to get help from consulting firms like Retiba to explore the various details and dimensions of this strategy. With the help of our specialists, you will have a chance to succeed and initiate a start in the new path you are taking. 

What stage is your startup at? Value your startup online with Retiba’s software free of charge. Your startup is at pre-seed and seed funding rounds, you are advised to use the Score Cards Method, Risk Factors Summation method to value your startup.

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