The changing crowdfunding landscape for impact brands and how to ensure campaign success in 2023
First published by the Birchal team on their blog – Birchal, Australia’s leading equity crowdfunding platform, simplifies fundraising so that forward-thinking businesses can build communities of engaged supporters and get back to shaping the future we all want to see.
Early crowdsourced funding campaigns were big news when Australia first began to allow private companies to offer shares to crowds of investors. They made headlines and were followed with interest as hopeful industry pioneers tested the new crowdsourced funding mechanism, made possible under changes to the Corporations Act.
But in just four years, a lot has changed, and how to reach and engage the crowd is changing too. Simply raising funds no longer instantly wins headlines, so knowing how to cut through can make a big difference to the results of the raise.
With zero failed Expressions of Interest campaigns translating to more than $6M raised for impact-brand clients in 2022 alone, Co-founder of Compass Studio Luke Dean-Weymark, knows more than most, what it takes to create a media strategy that cuts through the noise.
Here, Luke shares his insights on the shifting landscape of equity crowdfunding campaigns and the tactics that will count for purpose-led brands in 2023 as more and more founders incorporate equity crowdfunding into their funding strategy.
“I’ve had the privilege of working with the Birchal team since the early days in 2020 and crowdfunding has changed dramatically over that time. We’ve gone from having to explain the concept of an equity raise to playing an integral role in multimillion dollar campaigns.”
Each year is bigger than the last and the highly publicised success of so many projects has led to more brands exploring the opportunities that ECF can bring to their businesses. But opportunities also come with challenges and risks, so before you start making grand plans for your equity raise, here are some things you should start thinking about before you begin brainstorming all the ways you’re going to spend your hypothetical capital.
Take your time – preparation is key
Many times Compass Studio has been approached by a brand to support them on a campaign that is already open and bringing in funding. This rush to get a campaign page launched and then figure out the details of how you’ll actually attract investors is the most common pitfall of any equity campaign.
Like all things in life, preparation is key. Take stock of your position, story, offering, mission and resources, and consider what you have the capabilities to execute within this highly complicated, yet game-changing campaign. Your marketing campaign is going to be a key driver to your success, so ensuring you have taken the time to get your metaphysical, business-based ducks in a row is imperative.
Any partner you work with – whether it be marketing, PR, videographers or copywriters – can support your brand to bring the campaign to life and get Expressions of Interest through the door, but they can’t do that effectively if you don’t have your materials ready to go and a clear plan on what you’re trying to achieve.
The most successful campaigns we have worked on have always given us more time with their brand and Offer Doc to really understand their offering and audience in order to build an effective marketing strategy. The extra lead time allows you to plan out your story and maintain the feeling of control. These campaigns can get hectic, and the more planning and process you can put around your team and provide for your partners makes for a smoother process and ultimately, a better performing Birchal campaign.
Know the market and your audience – know the difference between your normal audience and an investor audience.
One of the greatest things about observing successful Birchal campaigns unfold is seeing how other brands attract investors and make a big impact, proving that CSF is such a valuable opportunity.
There are a multitude of elements that go into the success of a campaign, from existing audiences to the state of the market, the time of year and even our climate.
Never compare your campaign to another and assume you can replicate another. A nationally recognised brand with a lot of clout is very different to a brand that is only just launching and is still establishing a voice.
Similarly, the trap of assuming your very engaged audience will follow you wherever you go is a pitfall. Remember: you’re not speaking with your audience in the way you usually would. Selling five dollar cookies online is very different from persuading people to invest five hundred dollars in your business.
An existing customer database can certainly be a huge benefit to your campaign, but it doesn’t guarantee that you can convert those customers who love your beer, soap or app by using the same tactics.
There are more and more brands embarking on crowdsourced funding than ever before, so finding the best way to communicate your mission, purpose and USPs is how you can bring those existing customers along for the ride.
Spend money to make money – be prepared to spend big on social media advertising
Yes, it’s a cliche, but it’s very true. Crowdsourced funding campaigns are mostly massively driven by marketing. Attracting new audiences, tapping into your existing one, and building relationships with key stakeholders – like investors, board members, and the media – is what is going to drive the success of any campaign, and it’s going to take time and money to make it happen.
The most important thing to remember is to make sure you’re spending it wisely and in the most efficient way. Storytelling through PR can be a great way of spreading your message and introducing new potential investors to your brand, while also raising the credibility of your campaign and generating content that can be utilised on social media.
Paid social media is also one of the most effectives ways to reach a wide audience and to attract those extremely valuable Expressions of Interest. For a campaign aiming to raise anywhere over AU$1.5 million, you need to be willing to spend anywhere between $ 50,000 to $100,000 on social media advertising to get close to your goals. It sounds like (and is) a lot, and it’s because big investment targets require a high number of EOIs, ultimately creating a bigger bucket of people interested in your campaign. You don’t need to invest all of that straight away or even use all of that budget; but knowing what you’re willing to pay to achieve your targets is really important. As an example, if you had to spend $100,000 dollars to raise a target of $1,000,000 would you be happy with that result? It is similar to spending $10 dollars in advertising in order to sell something for $100 dollars. Seems pretty reasonable to me!
The other side of this financial investment is the classic trope of ‘time is money’.
When you’re running a high pressure, high impact CSF campaign, you need to be realistic that every hour your campaign is live is precious.
Between communicating with your existing audience, creating assets, speaking with potential investors and managing your board, all while keeping the regular business operations moving, you need to be able to delegate to experts in their field who know what they’re doing.
You may have those team members who can execute this in house, but if you want to maximise your campaign, you need to change your mentality from “this person will figure it out” to “I need the best people on this now”, so consider outsourcing to an agency or a freelancer who can lighten the load. This approach also allows you to work with people who have gone through the process before, and who understand how to amplify your campaign and brand in a way that has a genuine impact and allows you to focus on what you do best.
CSFs can be high risk, time consuming, expensive and stressful exercises, but only if you let it get to that state. These campaigns are also highly rewarding and valuable if executed correctly. The success of any campaign depends on how you plan for it and how you surround yourself with the right tools and expertise.
Do your research, ask questions and find partners before you take the plunge. Do the work now to ensure you can reap the rewards later.
Compass Studio is a Birchal preferred partner. After the completion of 10 Birchal campaigns since 2018, we’ve helped raise over $10 million for our partners, engaging their communities, elevating their purpose and amplifying their impact.
Considering a Birchal Campaign for your next stage of growth? Get in touch