Selling shares, Kickstarter style
Philip Ellison 26 November, 2012 at 03:11
Here at OgilvyDo we’re fascinated by crowd-funding and its increasingly diverse applications in business, as evidenced by our piece on Pubslush back in September. In the near future, organisations will be able to use a crowd-funding model similar to Kickstarter, RocketHub or Indiegogo to sell stakes in their company to investors online. Conceived to make life easier for small businesses, equity crowd-funding is a direct result of the JOBS Act (short for Jumpstart Our Business Start-ups), a new US law which aims to support entrepreneurs by loosening the death grip of certain SEC regulations. It has been backed by a wide range of prominent business figures, including the founders of AOL, Lotus and TechShop respectively.
While crowd-funding has been a popular fundraising method in the creative industries for a while now, the JOBS Act looks set to launch it as the de facto process for small enterprises in the United States – and, much like anything, if it catches on in America, the rest of the world can’t be far behind. RocketHub appeared in the US Congress this year, stressing three key (and universal) points; that crowd-funding democratises fundraising, empowers investors, and will lead to job growth.
So how does a small business go about sourcing shareholders online? In pretty much exactly the same way that an artist would go about crafting their Kickstarter campaign. Below are three absolute musts for putting your best foot forward:
Keep it personal. As a small company, one obstacle you face is that there are countless other start-up businesses out there vying alongside you for the attention of potential investors. You might not be able to offer immediate financial rewards to investors, but what you can do is help people buy into your idea. A recent article by the Wall Street Journal quoted Indiegogo as saying that crowd-funding campaigns with pitch videos are 114% more effective than those without. Creating a pitch video is an ideal way to grab viewers’ attention – and once you’ve got that, sell the dream!
Offer incentives. It’s already been mentioned that people buying shares in your company won’t be getting a rapid, hefty return on their investment. But you can sweeten the deal considerably by devising a set of Kickstarter-esque rewards. For example; a small donation might earn the investor a small discount code, while a larger amount could warrant a larger discount or free trial.
Get social. Networking is, and always will be, a crucial tool for small businesses. Luckily, professional networks like LinkedIn make it a lot easier to search for specific individuals who are likely to be interested in what your company has to offer. Additionally, a Facebook page and Twitter feed will help spread the word while simultaneously building your brand. Social media can also prove invaluable when it comes to acquiring press coverage: find a journalist or blogger who specialises in your business area, or a larger news site – once you’ve been covered by one blog, finding a second and third becomes a lot easier.