The content of this article has been adapted from Equity Crowdfunding: The Complete Guide For Startups And Growing Companies, launching on Amazon on November 1. Crowdfund Suite subscribers can download the entire book for FREE, this week only. Click here to download.
Equity crowdfunding is a worldwide phenomenon, worth around US$2 billion, according to Cambridge University. Still, most literature has focused on each country in isolation – there have been reports on UK equity crowdfunding, articles on Canadian equity crowdfunding, and books on US equity crowdfunding – but very little on equity crowdfunding in totality, and nothing at all on what campaigns from different parts of the world can learn from each other.
This is strange, as despite all the regulatory detail, equity crowdfunding around the world has far more in common than differences. It’s time to join the dots.
To create the definitive resource, I spoke with 20 companies who have run successful equity crowdfunding campaigns, 12 leading platforms from all around the world, and a number of other experts at the forefront of the equity crowdfunding revolution. They are from the United Kingdom, the United States, France, the Netherlands, Germany, Sweden, Finland, Estonia, Canada, the Middle East, Australia and New Zealand. This is a truly global perspective on equity crowdfunding.
Today, I wanted to share with you a sample of some of the key takeaways, and insights that will be shared throughout the book.
1. Equity crowdfunding is now a genuine alternative to VC and is being used by companies who could get VC funding, but are choosing to go to the crowd instead.
“The way we looked at it, raising the money privately might have been cheaper and faster, but crowdfunding just had so many other upsides – in better investment terms, and better publicity, that for us it just made total sense.”
– Laurence Cook, Pavegen, raised £1.90 million on Crowdcube (UK-headquartered platform).
2. Venture capital may be sceptical of equity crowdfunding, but this is changing.
“There’s certainly a group of crowdfunding non-believers in the venture capital community, but there is an increasing percentage who are buying into it. In some cases, they are even combing through the crowdfunding platforms, as a way of finding new companies to invest in.”
– Bret Conkin, Chief Evangelist, CrowdfundSuite (North American crowdfunding expert).
3. You can use equity crowdfunding to gain marketing exposure and raise money at the same time.
“Crowdfunding gives you great marketing in my opinion. And then there is the access to many great entrepreneurs and business people with experience, who give a new approach to your business.”
– Alicja Chlebna, Naturalbox, raised €212,160 on FundedByMe (Sweden-headquartered platform).
4. Equity crowdfunding brings on new brand advocates, and strengthens the bond your existing crowd feels with your company.
“Because since we are in the business of electric vehicles, we had a good hunch the public would be enthusiastic about our mission. As well as the money, we expected to get some free media time in TV, newspaper and radio, and tie our existing users closer to us. And that’s exactly what happened. We have been really pleased with how it turned out.”
– Juha Suojanen, EkoRent, raised €171,000 on Invesdor (Finland-headquartered platform).
5. Momentum in your campaign is critical. Investors follow other investors.
“The biggest challenge was getting traction out of the gate. We didn’t want to start with 0% on the slider bar, so we got to 15% when our campaign went live. But once we hit our minimum, we quickly doubled the amount committed in the final week.”
– Skai Dalziel, Guusto, raised CA$50,000 on FrontFundr (Canada-headquartered platform).
I will finish with a word from Ronald Kleverlaan – co-founder of the European Crowdfunding Network, and the author of the foreword to my book: “Because equity crowdfunding is still very young, it is important to look globally for good case studies of successful ways to attract funding.”
This is very true. When different equity crowdfunding markets learn from each other, I firmly believe all of them will become stronger.
If you enjoyed this article, you can read a comprehensive overview of equity crowdfunding by downloading Nathan Rose’s new book, FREE on Amazon for this week only, featuring even more insights from Crowdfund Suite and many other interested participants in the crowd economy from around the world. Click here to get your copy.
Nathan Rose is the author of this guest post and the founder of Assemble Advisory, an agency for companies wishing to pursue equity crowdfunding campaigns, and the author of the book: Equity Crowdfunding: The Complete Guide For Startups and Growing Companies.