Equity Crowdfunding: A Secret Weapon For Getting More Investors
by MARCUS KRIEG, on Jul 8, 2015 10:46:00 PM
Do you need more investors?
Getting new investors can be a painstaking process for many businesses.
If you’re like most people, you probably spend hours preparing and often travel to present your pitch deck to potential investors.
You know all that time could be better spent actually growing your company. But for many businesses, investors keeps the doors open until you get traction.
There’s never enough time.
And for more established companies, attracting new investors keeps your stock price high and helps you keep your shareholders happy.
Whatever your motivation for attracting investors, the problems are two-fold:
- Attracting new investors takes a lot of time
- Creating and delivering an effective pitch is a hard skill to learn
If your business needs to attract more investors, then you’re going to love today’s post. In it you’ll discover a brand new opportunity for attracting investors, without spending all your time pitching.
What Is Equity Crowdfunding?
Recent rule changes at the SEC have made it possible for businesses to use what’s called “equity crowdfunding.”
Unlike traditional crowdfunding (think Kickstarter), where the investor receives a reward for contributing to the company, equity crowdfunding allows you to give actual shares or equity in your company to investors.
In the past, equity crowdfunding just wasn’t possible because the rules for soliciting equity investors didn’t allow for the use of advertising tactics, including social media. This alone would make equity crowdfunding impossible.
But another important rule holding it back was that you could only get investments from “accredited investors,” or people with either:
- a net worth of at least one million US dollars, not including the value of their primary residence or have
- an income of at least $200,000 each year for the last two years (or $300,000 together with their spouse, if married)
That meant that even if you could advertise to potential investors, you couldn’t get investments from friends, family, or anyone that didn’t already have a sizable nest egg.
But after Title IV of the JOBS Act was implemented on June 1st, 2015, both of these prohibitive rules were revoked, making equity crowdfunding a viable option for American businesses.
How To Get Started With Equity Crowdfunding
Now that we can crowdsource investors, the big question is “how to do it.”
When presenting your pitch, whether in-person or online, you have two primary objectives:
- Provide the necessary details to persuade someone to invest
- Maintain their attention span long enough to share those details
If you’ve ever pitched to investors, then you already know it’s easier said than done. That’s why there’s an entire industry built around crafting persuasive pitch decks.
How can you meet these two objectives in a crowdfunding format?
Many businesses have chosen to write and promote articles talking about the opportunity.
But the problem with text is attention span. People don’t read like they used to anymore. In fact, according to Chartbeat, most visitors will only read about 60% of what you write.
But if you look at that chart, you’ll notice a spike at the end, which Slate refers to as “an anomaly caused by pages containing photos and videos—on those pages, people scroll through the whole page.”
You and I know that spike isn’t just an “anomaly,” but something we expect to see when videos and images are included in your content.
We’ve discussed this before in our post on “Why Video Is The Most Persuasive Form of Content.”
Unlike text, where visitors decide whether or not to continue reading after each period, video is a passive learning tool: once you start the video, you have to decide to stop.
That’s why when it comes to sharing your investor pitch with the masses, we recommend you use video.
Recent Investor Video Examples
In just the past month, WireBuzz has completed two different types of investor pitch videos for our clients.
The first is a more traditional pitch, which we created for Airware Labs. They have a nasal insert that helps you breathe better. They’re quickly expanding their product distribution on a global scale and need investors to maintain their growth momentum.
Check out their final video:
Natera, another one of our clients, went public on July 2nd. As part of their IPO strategy, we created two short, animated videos that were advertised publicly at NASDAQ.
The first appeared on the Nasdaq Tower on Friday:
And the second was used on the Nasdaq Marquee:
Unlike the first video, which provides a lot of detail for investors, these second two videos are more about spreading awareness to the financial community so that the major players on Wall Street look into their company in greater depth.
Two different strategies to encourage investment, but both using video as the primary delivery tool.
Now that equity crowdfunding is finally available, I recommend creating a pitch video for your investor outreach efforts.
And if you don’t have the resources internally, or if you just want to work with a professional team that understands the process, WireBuzz is here to help.
Have you seen other interesting uses of video to encourage investment? If so, let me know in the comments below.