Crowdfunding the beginning of a long-term relationship
By Karamjit Singh September 23, 2014
- Look at crowdfund investors as resource, not adversaries
- Successful campaign changes conversation with investors
“TELL them what you are going to do, do what you say, and when things go wrong, as they will, over-communicate.”
That was Jason Best’s advice to the audience during a panel session on ‘After a Crowdfunding Campaign.’
Best (pic) is the cofounder and principal of Crowdfund Capital Advisors and was a keynote speaker at the Securities Commission Malaysia’s Synergy and Crowdfunding Forum (SCxSC) from Sept 19-20.
Best advised the audience of close to 100 people, on a Saturday morning, to look at their [crowdfund] investors as a resource and not adversaries. “Use them to help you succeed, because they want you to succeed,” he urged the audience.
Understanding that it is a natural human tendency to pull back, wanting to fix a problem so that no one knows, he nonetheless advises entrepreneurs to break this tendency.
“Don’t even wait until things go wrong,” he advised, emphasising that the successful conclusion of an equity crowdfunding (ECF) or rewards-based crowdfunding campaign really marks the beginning of a long-term relationship with investors.
Best said entrepreneurs should actually start asking for help and support when they first start to have any problem.
Why so early in the game? “Because it won’t be first time this has happened. Others may have experienced it in different ways and by reaching out early, you can find out about how to solve it,” he said.
By talking about his problems early, the entrepreneur is also putting his investors on the same page as him, and allowing them to help.
On Aug 22, the SC published a consultation paper seeking public feedback on its proposed regulatory framework for equity crowdfunding.
This new platform would allow startups or other smaller enterprises to obtain capital through small equity investments from relatively large numbers of investors, using online portals to publicise and facilitate offers to crowd investors.
SCxSC was part of the Commission’s on-going outreach campaign to create greater awareness and to educate both investors and entrepreneurs.
Addressing a concern brought up in an earlier SCxSC panel discussion about having to manage too many investors and this act taking up too much of the entrepreneur’s time, Best argued that most ECF activities see between 50 and 100 investors coming in, versus the thousands you read about for some crowdfunding exercises.
In this case, setting expectations early is key, he said, adding that, “There are tools available today to help you communicate with large numbers of investors efficiently.”
This could be in the form of email groups, newsletters, video updates – anything that is meaningful and efficient to investors and easy for the entrepreneur.
Highlighting some research done on what it takes to be really successful in a crowdfunding campaign, Best pointed to the entrepreneurial ecosystem.
“Reach out to your fellow entrepreneurs. The ecosystem cannot just be a word ... it has to become a community where entrepreneurs come together to help each other and feel that support,” he said.
Creating physical spaces for entrepreneurs – co-working, accelerators and incubators – to feed off the energy that comes from creating something is really important, he added.
And while some may be concerned about handling multiple investors if taking the ECF path, Best offered a more positive take.
Both ECF and rewards-based crowdfunding are ways for entrepreneurs to demonstrate success, he said. “They show that you can raise money and execute on your plan. And this changes, for the positive, the conversations that you have with your angel investors and venture capitalists.”
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