Lessons from two months of crowdfunding.
This summer was a little different for team EcoHedge. In order to rest, recover and revel in the glorious UK sunshine, we skipped the beach, and ran a crowdfunding campaign.
Like most summer retreats, we met fascinating people, had loads of fun and learnt a great deal. But unlike most holidays, we had to evidence everything we said, pitch thousands of investors and respond to 24/7 questioning.
Now, having come out the other side older, hopefully, a little wiser and certainly a lot greyer, I thought I should share some of the learnings from our campaign. We raised over 400% of our original target amount (£420k), from 466 investors in 48 days, having started the process of pre-registration in late June.
Here is what two months of crowdfunding taught us, in a three minute read:
1. Focus on what matters, not what is asked.
In any competitive space (such as carbon accounting), it is critically important to be able to differentiate your offering quickly.
During our campaign the most popular question we were asked was;
‘How does your offering differ from X, Y, Z?’
I love these questions as it immediately confirms that the potential investor understands the problem we’re solving, has done research into our competitors and is interested in learning more about our space.
One thing it misses though, is the customer.
The question focuses entirely on the sellers, not the buyers. Why should sellers solving customer needs adequately, seek differentiation? Either they solve the problem adequately, or they have failed to cut to the core of the issue.
Therefore the question should really be; ‘has the competition adequately understood the needs of customers?’
Our view was they hadn’t.
Therefore, we changed the question from one of, ‘how are you different from the offering of your competitors’, to ‘how are you meeting the needs of your customers’
Competitors don’t buy your product, customers do.
2. Creating a sense of ‘FOMO’.
The success of crowdfunding campaigns is painfully transparent. Funding targets and raised totals make it impossible to hide. You aim, you shoot and you see where you land.
In fact — Crowdfunding campaigns enjoy an average success rate of 22.4%.
But, if you can live with those odds and you believe in your product, it also creates an unparalled opportunity to generate excitement. You have to stroke the lamp in the right way and that means effective communication. To the crowd your story matters. Crowdfunding isn’t just about rationality, it’s also about emotion. Whilst business cases can win minds, storytelling can win hearts. If you understand this, you can unleash the genie.
Once the momentum starts, it’s difficult to stop. Remember, crowds can topple governments.
3. Be seen to be believed — leveraging video.
Amongst the noise of social media, one content type stands strong: Video.
Yet video is still so infrequently and poorly used for corporate updates and investor engagement. Crowdfunding campaigns typically focus on the story of the start-up, the proposed use of funds and the success of the business to date. That’s not new. We just decided to use video to talk about these topics.
Seeing is believing and investors need to see their investment in real life. Therefore the founding team should be prepared to get in front of the camera to show what they are all about.
4. Act like a compass, not like the captain — guiding the discussion.
An open forum where anyone can leave questions or comments about your most sensitive business challenges is somewhat daunting. Coupled with this being open 24/7 and published to the world, is a mammoth PR undertaking, and undoubtedly many entrepreneurs’ worst nightmare.
Controversially, I also believe that it is your best friend. In the midst of the storm, if you can steer the discussion to calmer waters, you can demonstrate your resilience.
Energy is never destroyed only transferred and highly charged criticisms should be used as a spring board for electrifying your campaign. It allows you to engage with a wider audience and introduce relevant topics whilst productively guiding the discussion.
Use criticisms wisely.
5. Call them in or move them out— qualifying investors.
Sales is the lifeblood of any organisation. Any sales professionals will know the pressure of forecasting and committing deals. Approaching valued investment from pledged investors is no different.
People do not have to invest but it is your job to assess whether they will. If they are not going to, they should be qualified out and efforts should be focused on those still interested parties.
Your product isn’t for everyone, and neither is your investment opportunity.
EcoHedge is a UK-based, climate-tech start-up, helping SMEs to get to grips with their carbon accounting and reach net-zero, faster. Our software intelligently captures, calculates and categorises emissions data to give a comprehensive view of a company's carbon footprint.
For more information visit: ecohedge.com