Although investing is still very much about relationships, we are living in the digital age so it’s no surprise that when companies need extra funds, the first place they go is online. The ease and convenience of online pledging and deal sharing complements the process perfectly and crowdfunding, in particular, has been an integral part of this landscape since its modern genesis in 2011. However, it’s a sector that is steeped in myths and misconceptions: it’s an easy way to raise funds, you don’t need your own community and that essentially you can just sit back and watch the cash fly in.
Envestors has raised over £130m in funds since 2004 and we know that seeking equity finance is a complicated, lengthy process that needs a great deal of planning; without this understanding – and in part due to these myths plaguing the market – companies simply aren’t doing their crowdfunding campaigns justice, evidenced by the fact that only 45% of such campaigns succeed. We built the Envestry for Scale-ups platform that not only hands the reins of control back to the entrepreneur, but gives them the most efficient, cost-effective way of reaching their funding target. We are often asked about how our platform differs from traditional crowdfunding sites, so we decided to list our top five factors that scale-ups should consider when deciding whether to crowdfund or use a personalised platform to raise equity finance:
1 A helping hand
By law, any entity seeking funds needs to get an FCA sign-off – essentially guaranteeing the proposition is clear, fair and not misleading – so this is offered by all digital facilitators. All crowdfunding sites also have advice on how to prepare for a pitch; Seedrs, in particular, is known for its in-depth Q&A and guides and Crowdcube publish tips with videos and articles in their ‘knowledge hub’. However, all this advice is generic, so every entrepreneur, regardless of sector, is getting the same answers. With an Envestors platform, however, you can get as much bespoke help as you need – from a dedicated investment analyst who will prepare your Kidd or investment note, help with pitching and presentations to tailored investor relations: ultimately, our experts will give you the best chance of reaching your funding target.
2 Your own branded site
A crowdfunding campaign will look like every other campaign on a particular administrator’s site. You can add your logo and a photo, but at first glance it’ll look exactly like everybody else’s and is designed as per the facilitator’s standard style. Your own platform, however, is white-labelled; your logo and branding in a digital space that is unique to your business and 100% tailored to the way you want it to look.
3 Total control of your campaign
One of the greatest gripes we hear about crowdfunding, is that facilitators set a fixed campaign window, tending to be 30 – 60 days in length. Envestors know that to give yourself the greatest chance of success, the ‘Always On’ approach is better. Our scale-ups have total control over their campaigns, running them for as long as they want. The benefits of a flexible campaign are myriad: it takes time to find the ‘right’ investor (and for the right investor to find the perfect deal), it maintains the investor relations mindset (if you’re always fundraising, you’re always communicating) and it also allows companies to capitalise on any buzz or news, such as a big contract, some unexpected publicity or a prestigious hire.
4 Keep your investor details and sensitive documentation private
One of the greatest myths surrounding crowdfunding is the belief that you don’t need to have your own crowd. However, as most sites require you to be part-funded before you are even allowed to sign up, you have to have built your own community first to drive this portion of investment. Once you sign up, your crowd – whether they’re your friends or family – will become part of the facilitator’s crowd also. This allows the site to access their data, in order to swell their numbers and promote other deals. With your own digital platform, you can keep these precious people to yourself. This also applies to the sharing of any sensitive information: consider the scenario that you’ve got competitors in the market – what is to stop them from becoming an investor and being granted access to your secure data for as little as £5? The Envestors platform comes with a secure data room, meaning you can choose what to share and with whom.
5 Make initial investors repeat investors
The importance of investor relations cannot be overstated. We have spoken to thousands of angels and high-net-worths over the years and the one thing we hear time and time again, is how they hate to be treated like an ATM and only contacted when the business needs money. Crowdfunding sites do not offer a dedicated investors communication feature, as their typical investor tends to only pledge a very small amount; with your own platform you have a built-in portal, so that your investors can be kept up to speed with all news – good or bad. A continuous, open dialogue has multiple benefits for a scale-up, not least that even if you reach your target in this round, you’ll need further funding down the line. The chances of getting follow-on investment are much greater if you’ve kept your investors warm and feeling loved all along.
Want to learn more about how your own platform offers you the best chance of funding success? Take a look here