An article we liked from Thought Leader David Shaner of Offline:
We raised a $2.4M crowdfunding round in 30 days from 767 investors. Here’s the full scoop.
The speed and scale of our round (in the midst of a challenging macro environment) caught a lot of attention, and I’ve had quite a few conversations with other founders who are considering crowdfunding.
The vast majority of what I learned about the crowdfunding process came from founders who had been through it themselves and later took the time to share what they learned. I’m hoping to be able to return the favor.
So, here’s the scoop on what led me to crowdfunding, the playbook we ran, and some parting advice to founders considering a crowdfunding round themselves.
Note: I reference Wefunder in here a lot since we used their platform, but they’re by no means the only option.
First, here are the five “unlocks” that led me to do a crowdfunding round in the first place.
This wasn’t the first time I’d considered raising money through equity crowdfunding. I’d come close several times before but always stopped short due to one objection or another. Here’s why I finally pulled the trigger.
#1 you can now aggregate all of your crowd investors into one SPV.
This is a pretty new development that has knocked down the single biggest objection to crowdfunding. Now, instead of raising money from hundreds of investors and adding hundreds of new lines to your CAP table, you can aggregate all of those investors into a single SPV and add one line.
#2 top-tier VCs are participating in deals alongside crowdfunding.
Wefunder has an incredible page making the case that, for B2C companies in particular, a “sidecar” crowdfunding round is going to be a staple in the funding playbook alongside VC. Now that crowdfunding doesn’t have the “smell” that it used to, more and more companies are jumping in and it’s being normalized for VCs.
#3 you can raise crowdfunding (Reg CF) and traditional (Reg D) rounds at the same time and funnel both through a crowdfunding portal.
This was a big deal to me. This means that if you have an accredited investor who doesn’t want to be lumped into the crowd SPV (i.e. they want their own line on the CAP table, easier management of their equity in Carta, etc.), they can invest in a sidecar Reg D instrument but still funnel their money through Wefunder as the investment front-end. This allows you to to raise under both SEC instruments using one front-end portal. More on that later.
#4 investments >$25k that you bring to Wefunder have $0 platform fees.
Wefunder’s standard fee is 7.5%, but if you dig deeper you’ll find an easter egg: any investor that you invite directly to the platform who invests $25k+ has no fees. Zero. This makes funneling larger investments through Wefunder “free.”
In addition, Wefunder has a concierge closing team that will help you collect wires and execute signature docs at no cost, saving you from hourly legal fees spent chasing wires and sending e-sign docs.
#5 Wefunder allows you to turn customers into investors
This is the obvious one and the entire value prop of crowdfunding.
Now, here’s the playbook that we ran to raise $2.4M in 45 days
Step 1: prep, prep, and more prep
The actual public funding window for our campaign may have been 30 days, but the work started about 2 months beforehand. I wanted to make sure we had a beautiful and compelling campaign page that could accept investment as soon as we launched. That meant:
- a compelling video that needed to be storyboarded, shot, and edited
- a beautiful pitch deck with a compelling narrative
- financials that had reviewed and signed off on by a CPA
- a completed Form C (Wefunder helps a little here)
This is a lot of work, but virtually any fundraising is going to be time intensive, and most of the work overlays with the prep you’d undergo to raise money from angels.
It was also highly motivating to know that the assets we were creating would be used to market ourselves to our existing customers instead of being locked up in a pitch deck and data room that only a handful of people would ever see. Here’s a link to our page.
Step 2: raise 33%-50% of your target amount before you launch
My goal on the day we launched was to already have a fundraising bar that was 1/3–1/2 full. Like any form of fundraising, crowdfunding has a strong psychological component: the more momentum you have, the more...
Read the rest of this article at davidmshaner.medium.com...
Thanks for this article excerpt and its graphics to David Shaner, Founder & CEO at Offline.
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