Written by KorePartner Jason Fishman at DNA. See the original post here.
Before the new SEC regulations, about 20% of Reg CF campaigns hit the seven-figure level. In other words, most campaigns simply do not achieve their full cap.
They’re are many reasons why campaigns don’t hit the max, and many would sum it up to lack of marketing and business development.
However, many people don’t consider the portal themselves. Sometimes a portal and issuer don’t fit, and I’ve seen campaigns that were underperforming on one portal, achieve high success on another.
Thus, picking the right portal for your campaign is an extremely important component of your raise. While DNA can not advise you which portal will best suit your needs, we can give you some tips and our top five things to consider when choosing your equity crowdfunding portal.
So, we should explore anything you can do to set yourself up for a win and within the desired period. This is a critical component of your round.
Investor Audience Size
One benefit of using a filing with a portal is to leverage their existing investor audience. Typically as campaigns raise more, the portal’s audience takes more notice, and are more are likely to invest.
From firsthand experience, I can say that as portal technology and user experience improves, the larger these investor communities are growing. Pick a portal with a large, engaged, and active audience. Don’t forget to ask the portal how they leverage their audience during the course of your campaign for more success.
As equity crowdfunding grows in popularity, more and more portals are emerging, dedicated to a specific focus. For example, Bioverge, is specifically tailored to healthcare startups, while Waterworks, is geared towards technologies advancing water solutions.
Not only do these platforms attract a very specific and engaged industry audience in that industry, but they typically have an experienced team that has a strong portfolio of niche-specific deals, and understands the nuances around their specific area of focus. If a platform can show a list of campaigns they have done successfully in that industry and have a high volume of investors attached to it, they will be valuable resources for an issuer.
A niche-specific could be a great option for your campaign, however take into consideration many are still in development and growing compared to the more-established and well known portals.
The data you need is out there.
I highly recommend starting at KingsCrowd, as most of their information is available for free or a very light subscription fee. On KingsCrowd you can do due diligence on each portal and their success rates.
You can also look at their analyst reports to see top deals, deals for an industry, deals per portal, and how much they have raised. Set a benchmark for yourself, and note which campaigns and platforms hit your benchmarks.
You may find that the volume of campaigns these portals have taken on has dropped in the past months, especially when you are looking at entry-level or mid-tier portals. You may find that it has skyrocketed. How many campaigns are below or above a milestone level may also stand out to you.
The numbers don’t lie. Take in as much data as you can to see how successful campaigns are currently doing on their platform.
Equity crowdfunding campaigns have a lot of ups and downs, and when your campaign isn’t performing you have to rely on your portals team to support and provide white-glove customer service..
You can get a sense of what the experience will be during your meet and greet. I recommend asking the following questions and paying attention to the working experience:
Who will be your day-to-day point of contact is?
What does the working process together look like during the pre-stages of your live campaign?
How do you optimize when things are not going according to plan?
Is the portal going to disappear and be afraid to talk to you?
Are they going to come to the table with constructive recommendations?
Is there anything they can do to go the extra mile among promotions to their existing audience?
When the campaign is going according to plan and ramping up at speed, how can you scale and get there quicker?
What will their partnership with you look like at those stages?
I would also recommend speaking to three or more portals, and look to intuition about who is committed to your deal and confident in the success of it among their investor audience on their platform.
This is a bit of a controversial topic because the SEC requires portals to treat each issuer the same. But they have different benchmarks that once you hit the increments of capital funding, they promote you to their email audience.
But if any groups show so much confidence in your deal that they will bring more to the table, I would note that in the review process. Some of these things include:
Private investor groups
Special placement on the site
Introductions to different accelerators or different VC groups that back the deal beforehand
Introductions to various types of angel investors, strategic partners, industry experts, and more
However, I would not shape my selection merely on this factor, but be cognizant of it. Crowdfunding is essentially a team sport that occurs within a small window of time. The more resources you bring to the table, the better.
So, if there is any portal giving you additional value beyond their standard package because of how they envision it equating to your success, it could be a factor in your decision-making process.
Pick Your Portal Carefully!
Listing your deal will not ensure ANY results.
Setting up and managing a successful campaign takes careful planning and forethought, especially when it comes to picking your portal. Having a strong understanding of the top portals available is going to be an educational and helpful process across the board.
Here are some of the top portals available for you to consider:
You may get tips from one portal that you apply to another, and it is important to become part of the entire equity crowdfunding ecosystem rather than selecting a partner and move on. These relationships continue, so I encourage you to map out what a relationship could look like with each portal, and nurture it.