Fundraising and investor acquisition are fundamentals in the life of a founder that cannot be approached without a solid action plan. As with every aspect of a business, you’ll need to set a clear strategy before sending your very first email to a VC or a business angel.
Crowdfunding for investment requires a strategy that is well defined, with an execution that is carefully crafted. With our team of growth hackers, we’ve helped UK based start-ups to achieve their pledge.
In this post, you will find some key takeaways based on the growth mindset – inherited by years of growth hacking and crowdfunding experience – which we can now apply to the world of investment for start-ups.
Understand your target audience
Investors are not a shapeless mass and there should be a few golden rules in the mind of every single growth hacker.
The way we phrase them is:
– Define your Northern Star metric
– Know your audience
In the case of crowdfunding for investment, your Northern Star metric is the number of pledges you receive.
Know your audience – it’s investors. However, don’t get distracted: “I am targeting investors” is not a strategy. You need to dive deeper, be focused and know who you want to deal with, using the correct tools for the right actions.
The first tool in your toolbox should be your message and how it resonates with your audience. Messaging is an essential part of any growth hacking journey; the more specific you are, the more you are able to engage your audience. You also need to know who you’re talking to and the first step is to define them into two groups:
– Previous Investors
– Potential Investors
The investors who have invested in previous funding rounds, which means you have already gained significant buy-in from them. As they trusted you enough to give you their money, so they’re the easiest people to engage with.
They know your company name, they know your business model and the traction that you had when you first started. They most likely already follow your social media channels or receive your investor updates (because you send them investor updates, right?).
At the same time, you should already be fully aware of which verticals and sectors they are interested in, which are the business challenges that worry them and the strategies, tactics and product features that excite them the most.
With this knowledge, you can remind them why they chose to invest in your company in the first place. Our fundraising advice for start-ups teaches you that not every investor is alike – if you’ve been fortunate to find the ones that love you, stick with them and convince them why they should continue to invest in your company.
Knowing them means that you can be relevant to them.
If you are running a crowdfunding campaign for your next round of investment, it means you are deeply committed to going above and beyond angel investors who have previously invested in your company. The sweet spot is to find a balance between previous investors and new investors, who can expand the size of your next round and take a seat at your start-up board.
Using a “growth mindset” when approaching fundraising. is no different from what you do with your clients. Before launching any campaign or activity, you need to ask yourself four questions:
Who are the investors I want to have a conversation with?
Where do the investors that I want to have a conversation with hang around digitally?
What do the investors that I want to involve in my pledge read and where do they gather information about start-ups?
Who do I know online (on Twitter, LinkedIn, Reddit, …) that is at a 2-steps connection distance?
Truly understand your goals with different types of investors
Now that you have a clear understanding of the two different types of audiences, you need to define your intermediate goal such as your funding target.
Our recommendation is to clearly define the intermediate goals that you need to achieve and avoid sending untargeted messages to potential investors.
Here you can find an ‘ethical’ goal and a ‘tactical’ goal for each type of investor.
1) The ethical goal: Reinforce your company’s growth trajectory
2) The tactical goal: Increase the size of the investment they’ve already made in your business
1) The ethical goal: Educate the investors about your growth strategy
2) The tactical goal: Initiate the first meeting in order to engage with the investor to educate them about your vision, results and growth plans.
Create the touchpoints where you want to cross paths with investors and execute plans on the right channels
According to the different audiences and the different ethical and tactical goals you need to achieve, you will deploy different types of growth hacks and best practices.
Here you can find 5 actions for each type of investor that will drive your growth hacking for fundraising.
The goal is to ensure investors know about your evolution and trust you enough to invest in you.
1) Make sure you follow all of your investors on social media channels
2) Keep an eye on what they post and with a certain regularity make sure that you like, comment and engage with them.
3) Make sure you write content that is relevant for them and share it with them once it is published on your blog
4) When you have PR coverage, send a sweet and short email to all the investors (ideally addressing them by their first name) to let them know about the feature. Most likely they will share the news with their own network.
5) Twitter is a great channel for maintaining relationships. Retweet, like and engage in conversations.
The purpose of your growth hacking efforts is to involve new and great investors in your pledge. As mentioned before, this is all about creating multiple touch points where you capture information about your potential investors. These touchpoints are necessary to make sure that your email asking about a pledge comes as the natural consequence of a series of brief interactions and deep conversations – anything but an out of the blue, inappropriate request.
- On Twitter make sure you share all industry-specific relevant updates and use hashtags that are used by investors who work in the same space
- Tie together your PR efforts with your SEO and outreach strategy, so that the content that others write about you is aligned with the keywords you want people to find your business
- Make sure that all your team and staff are aligned and ready to spread the word of any single update via Linkedin. There is nothing more viral than 20/50/100 people propagating news and insights via Linkedin
- Drive investors to your website and then make sure they have a dedicated area where they can sign up
- Once you get email addresses, you can start being more specific and share information about your business, your growth, your mission and your business model. Measure the performance of your emails so that you can follow up in a more personal way to new potential investors
The world of growth hacking is based on a scientific approach and a series of short experiments, that allow you to focus on analysing what works. You cannot afford to be impersonal with investors – you need to be relevant so that any information or request becomes contextual.
Think, plan, measure and execute. And make sure that you always stick to your ethical and tactical goals.
Kate Fairhurst is the co-founder and CEO of GrowthMinds. GrowthMinds is a growth ecosystem that enables startups and scaleups to activate their target markets and scale up the growth of their client base.