Raise to Launch: Using Equity Crowdfunding to Raise Startup Funds

Business.com / Finances / Last Modified: February 22, 2017

Crowdfunding for startups is oh so hot right now, but it's different from regular crowdfunding. Here's what you need to know to do it well.

How probable is it to use equity crowdfunding to raise startup funds? And if it's possible, how exactly do you do it?

Manny Fernandez, Co-Founder and CEO of DreamFunded.com and serial entrepreneur, just shared some great tips and tricks at Slush 2015 in Finland.

These tips provide a number of actionable takeaways for leveraging equity crowdfunding in order to fund your startup.

Related Article: Does Crowdfunding for Startups Actually Work?

$2 Million In Funding: It's Possible

Manny started with a story of how one small-town man used Kickstarter for his 30-day crowdfunding campaign. He created a well-thought out strategy that would enable him to get maximum pledges. The incredible part is that this guy used no money to do everything from line people up who would donate, as well as get others to offer social proof. There is little doubt that this man spent a whole lot of time effort in order to collect $2 million in startup funds, and led to his campaign becoming one of the top 25 of all time.

This guy knew he had to put the time in, but the most important lesson he teaches raising money is not necessarily about selling to a few with deep pockets (who are extremely willing to tell you what you can use these funds on), but more so, showing that the power of many can create the reality of a dream realized. It's not about just about you and your investors—it's about the audience you serve and what your product or service can do for them. That's what makes people want to invest, and I couldn’t agree more.

My funding success rate completely turned around when I went from talking about me to focusing on those giving me the money. It had to be all about them if I was asking for their money.

The same can be said when you are putting together a presentation for investors for equity crowdfunding. They want to know how (what is essentially a gamble) will pay off for them.

To reach this point, there are a few things you have to do first and then you will fly through to that pitch:

  • Pre-screen and target those investors who would be interested in your business. I had to spend considerable time sifting through the available investors to find those in the same industry who would understand what I was even talking about and presenting, and then be interested in what I was trying to achieve.
  • Reach out to these investors on places like LinkedIn to connect. I found contact information for many of those I pitched on this professional social media site.
  • Offer them an online meeting appointment that fits their schedule and maximizes how you spend time on raising funds. While I ended up spending a lot of time traveling to many meetings, I now use this communication channel to speed up the process, including requesting that those who want to present to me use an online video conference to do so.
  • Develop a presentation around only those things investors want to know about: who is on your team, what is their background, how your business model makes money, what is your legal structure, what is the product or service you offer, and what does the ending of their investment look like. As a founder and as an investor, I believe these are the only important components you need in your presentation in order to get attention – and funding.

Related Article: Inside Equity Crowdfunding: The Quire Difference

Be sure to check out the video below to get Manny’s full talk as well as information on how to get a PowerPoint template he mentions in his presentation. You can get a copy by sending an email to the address at the end of the video.

This presentation has helped numerous founders get the funding they needed to launch.

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