“Community Rounds” vs Institutional at the get-go?
As we begin to get off the ground at Conduit Venture Labs, like any new venture, in this case a Venture Studio, there is a need to raise seed-capital to the get the engines rolling. As one who has raised capital in the past from individuals and funds alike, I’ve been thinking a lot about not only how much, by when, for what… but more importantly from whom!!??
Our Vision: at Conduit we believe the most successful venture studios are those that have a healthy and engaged community of investors, partners, and mentors (or what we like to call the Conduit Fellows — check out this previous post)
The Conduit Experiment
The Hypothesis: “By raising our seed round from those looking to engage beyond just the capital — by offering time, their networks and possibly resources will enable the studio to hit our company creation and EIR residency goals faster — and it will just be a lot more fun!”.
The Perspective:
Raising money from your community may take longer than raising funds from institutional investors, but it can lead to a better outcome in many ways.
- Building a loyal customer / partner / entrepreneur base
When you raise money from your community, you are essentially tapping into your customer and resource base. By doing so, you’re able to build a loyal following of people who are invested in your success.
2. Access to valuable resources
Raising money from your community can also give you access to valuable resources such as skills, knowledge, and networks. Your investors may be able to provide you with mentorship, introductions to key industry players, or even offer their own expertise to help your business grow.
3. Stronger alignment of values
When you raise money from institutional investors, they often have their own goals and objectives that they want you to achieve. In contrast, when you raise money from your community, you’re more likely to find investors who share your values and mission. This can lead to a stronger alignment of goals and values, which can be beneficial for the long-term success of your business.
4. More patient capital
Institutional investors often have strict timelines for when they expect to see a return on their investment. They may also be more likely to pressure you to make decisions that prioritize short-term gains over long-term growth. In contrast, community investors may be more patient and willing to support you through the ups and downs of your business journey.
Tips for successfully raising funds from your community:
- Be transparent about your business goals and financials. Your community investors will want to know what they’re investing in and how their money will be used.
- Offer incentives such as discounts, exclusive access, or special events to your community investors. This can make them feel more connected to your business and more willing to invest.
- Leverage social media and other online platforms to reach out to your community. This can be a cost-effective way to promote your investment opportunity.
- Consider working with a crowdfunding platform that specializes in community fundraising. These platforms can provide you with the tools and resources you need to successfully raise funds from your community. (i.e. WeFunder, AngelList)
So what next?
There is only one thing to do next…. lets run the experiment and see how the hypothesis holds?
I would love feedback from others who have taken this approach and have seen the good, the bad and the ugly. If anyone is interested in learning more about Conduit, joining the community and our mission please do reach out!
fellows@conduitventurelabs.com
