To determine the best fit of investment for your business, you should consider your goals and the value you want beyond funding.
Crowdfunding allows companies to raise funds from a large number of individuals, increasing the potential investor pool. Crowdfunding campaigns can also generate publicity and awareness, attracting customers and potential strategic partners. Having a larger, engaged group of investors can help create a community of loyal customers and supporters.
VC's, Angel investors and strategic partners can all bring industry knowledge, experience and valuable connections to help you succeed. They have the ability to make larger investments and can enhance your credibility and market position if you partner with a well-regarded investor in your industry.
Increasingly, companies are going for the best of both worlds by undertaking a capital raise with retail investors by way of a crowdfund as well as having more strategic professional investors taking part in the round. Projectworks raised $1.5m from a mix of wholesale investors as well as $2m from VC fund Punakaiki, for a total round of $3.5m. This allowed them to take strategic support from Punakaiki as well as some of the individual wholesale investors that participated.
Some may look to take retail and wholesale investor money from individuals in earlier capital-raising rounds, before focusing on more strategic institutional investment from VC or PE investors. ArchiPro raised $12m privately from a wholesale family office and high net-worth investors, before raising $33m from a global VC firm, Tiger Global. ArchiPro benefited from supportive wholesale investors with various complimentary backgrounds to grow the business, before taking on a large investment with a global partner when the timing was right.
PurePods conducted a full retail raise and ended up getting investment from people interested in the business from a consumer angle as well as high net-worth investors looking more from a pure financial return perspective. The business model did not necessarily lend itself to raising venture capital investment due to the growth and return profile, however, is likely to suit a private equity investor once scaled up further, so the mix of wholesale and retail investors for their capital raise was a good fit.
Like Purepods, First Table took investment from retail and wholesale investors, as well as $1m from an investment fund. In doing so, First Table has an aligned set of investors who are consumers, advocates, and strategic investment parties to help with the company's future growth.
Crafting a compelling story is vital in creating a pitch or investment case that creates value for investors beyond data and facts. It is important to remember that potential investors are often looking at a number of companies to back so creating a story makes you stand out from the pack. Storytelling allows founders to get complex arguments across in a relatable way; using analogies and metaphors can help investors understand information better than overloading them with data and niche, industry-specific language.
Particularly with private equity investments, people are searching for companies where the product or service fits into their world. Because people are increasingly investing in companies that they care about, a relatable and enticing story can help you reach the right audiences. You can use storytelling to your advantage to attract people that care about your vision and potentially provide invaluable industry knowledge.
When you are looking for investment into your company, having a strong network can come to your advantage.
Investors are often interested in companies where they know the founder or are introduced by trusted individuals in their network. Building these relationships and connections prior to starting an investment round increases the pool of potential investors. It can also open the opportunity to experienced people who could be mentors or advisors, providing invaluable industry knowledge.
Attending industry events, engaging in online communities, or actively reaching out to introduce yourself or be introduced to people are all great ways to start expanding your network. Creating opportunities for face-to-face meetings is a meaningful way to nurture and grow these connections.
When you are raising capital, having an effective marketing campaign is an excellent tool for getting your business in front of those who may not have heard about you. A mix of PR, email and social marketing can help in reaching a wider audience.
It is important to continue to keep your network of investors engaged post-raising capital. Providing business progress, hosting shareholder events or creating opportunities to face to face meetings helps to nurture these relationships for continued support to your business for future growth.