When companies begin the capital raising journey, it is no longer about going public or simply getting a company’s product in front of venture capitalists. To be successful in our current capital raising landscape with Regulations A+ and CF, organizations must build a community of investors. This not only brings life to your business, but companies are also now able to leverage this network to find success in capital raising activities.
A Different Spin on Community
One of the most valuable parts of Regulation Crowdfunding and capital raising with Regulation A+ is that you can talk about your offering everywhere instead of keeping information confidential. This one fact has made building a community of investors vital to all companies looking to raise capital. RegCF platforms like WeFunder allows companies to raise millions of dollars by getting the investment opportunity in front of potential investors. Because of the many investors that can be brought and board and told about your investment opportunities, investment crowdfunding is not just an excellent way to raise capital but a way to build an army of brand ambassadors and customers.
Instead of just offering a means for investment, JOBS Act crowdfunding regulations create a new way to take investors on the journey of building your company. Regulations like A and CF provide a way to tap into customers who already care about your brand and bring them on the capital raising journey by making them part of your team as investors. Fostering this relationship with customers and investors is perhaps one of the most important things a company can do.
Creating a Crowd of Investors
While creating a crowd of investors can seem daunting, especially for smaller, less-established businesses, the crowdfunding journey starts from within. Start with your personal network and try to gain momentum there. Not only are you gaining investors, but if your offering doesn’t stick with your inner circle, then it probably needs some refinement before a larger community of potential investors accepts it. Many crowdfunding offerings have a lead investor who helps negotiate the terms of the offering and put their own money in the deal to ensure your valuation is in a place that will attract investors, not deter them.
By offering a compelling opportunity and being open and honest with the customer and potential investors, you can begin building the community that will help you reach your capital-raising goals. While your inner circle is a great place to start with your capital raising effort, you also need to have a balanced mix of investors for potential success.
There are a variety of different capital-raising regulations which utilize community building in various ways. Regulation CF offers lots of capital raising upside for those who leverage communities with the ability to publicly promote and get the word out about your investment to attract a larger community of potential investors. With Reg A+, issuers can raise up to $75 million through a similar crowd of accredited and nonaccredited investors. However, this comes with a lot of responsibility. Issuers must know how to nurture these relationships beyond just investing money. It is a privilege to allow these investors to invest in a company, something which must be remembered when building communities.
This need for the community makes things like media attention less of a metric to measure success on. You can put a campaign in front of a large audience, but without the support of a community and the drive of a fascinating company, it will not necessarily succeed. By building your community of investors, you can better capitalize on capital raising and brand awareness opportunities.