This article was adapted from Nathan Rose’s Equity Crowdfunding: The Complete Guide For Startups And Growing Companies, first released on Nov 1 in 2016.
Equity crowdfunding is a global phenomenon: The worldwide crowdfunding market is projected to reach $28.8 billion by 2025. Despite differences in its regulation, equity crowdfunding around the world has much in common.
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.
To provide you with insights into equity crowdfunding, here are just some of the key takeaways shared throughout the book:
1. Equity crowdfunding is now a genuine alternative to venture capital (VC)—it’s used by companies that could get VC funding, but chose 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. VC funders may be skeptical of equity crowdfunding, but this has been 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, as 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 one another, all of them—I firmly believe—will become stronger.
Nathan Rose is the author of this guest post, 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.