Get back to your roots and stay there: why equity crowdfunding might be for you
We’ve helped plenty of businesses engage with their crowd to raise equity.
It’s not for everyone.
It’s best for businesses that are still fully engaged with their roots: the customers they serve. When you need funds to grow, it’s hard to maintain those roots when you take on external funding (not impossible but definitely hard). One way is through equity crowdfunding.
Why we get into business
Remember when you first started your business?
For most people, it wasn’t for profit. Profit was a factor, sure, but there is often a greater mission or purpose that drives the decision; a company just happens to be the vehicle we choose to get there.
Once the organisation is established, operations are going fine, and cash flow isn’t too bad, we are often faced with opportunities to grow. Again, it’s not often chosen just for financial gain (though that is often implied as a consequence). Usually, it’s because we could serve our customer so much better if we grow. We could find more people who need what we have. The impact would be greater.
The plight of a business with heart
Growth takes funds.
Maybe your BAU profits aren’t sufficient to facilitate the growth that your impact deserves.
VCs and angel investors don’t seem right.
You might have looked around and realised the risks to the heart of the company by selling off some to people with different visions, missions, and timelines.
(We’re not knocking outside investment. It works for some companies. But if you have a VC firm invest looking for a 5 year exit, you’re probably going to have to do things with your company to meet the 10x return they’re probably expecting. Remember that you are selling a chunk of decision making power, not just ownership.)
Regardless, it shouldn’t be this hard to grow a company with heart.
But it can seem like the only way to do this is to give up some heart or hope that next financial year, your company will have enough leftover to grow itself.
There’s another way
In the last few years, the Australian Government has created equity crowdfunding legislation which has allowed for a different kind of investment into early stage companies.
We think it’s pretty awesome. You can raise up to $5m from your crowd in any 12 month period. It lets your crowd become shareholders and ambassadors.
This is a gamechanging alternative to the really old game of investment we’ve been playing. No longer do you have to pitch to strangers in suits for money that comes with strings.
Now you can pitch to people who know and love you. And you define the strings.
We believe in this way. We’ve toasted to nontraditional investment with many founders at the beginning and end of their campaigns. We’ve seen over $19 million (AUD) flow through our platform to 28 organisations across Australia and New Zealand and we’re proud to say that these are organisations with heart.
There’s fading and there’s failure
Fading is running out of cashflow.
It sucks to be Pebble.
It sucks that Firefly was only one season.
You don’t want to fade.
A greater failure, though, is losing heart.
No one wants to be the next Dick Smith. He was once beloved and now we remember him as the man who didn’t change with the times. His wasn’t an issue of money. It was an issue of heart.
No one wants to be Sunrise. They were a great calendar app with a heap of users. They shut down the service when they got acquired by Microsoft, leaving their entire crowd abandoned. They took the money and gave up the heart.
Don’t do that. Don’t get investors who don’t care about what you do.
There’s success and there’s starting a movement
Success is doing what you do best with the crowd who already love what you do.
Get back to your roots. And stay there.
If you’re up for a crowdfund, get in touch. With our experience, and feedback from our crowd of campaigners, we’ve pulled together the CrowdfundingU programme to help organisations crowdfund. We’ll put you through it and get your campaign up in no time.
You can check out our current campaigns here.
