Equity crowdfunding - you’re not asking for a handout!

Disclaimer - none of the below is investment advice it is simply my opinion. 

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So, we have a client on the cusp of pushing their crowdfunding campaign live. It is, I think, a strongly validated business opportunity. Year on year growth, popular sector, strong team in place and relatively unharmed by the current times. They have secured significant lead investment for their campaign and were due to open the opportunity to their wider networks too, including customers, extended professional networks and friends and family.

Great! That’s what equity crowdfunding is all about, right? 

However, in one of our client team meetings the other day, it was brought up that said client was now feeling hesitant about approaching their contact list to ‘ask for money’ at this time and instead was only going to share the campaign with select people. This isn’t an uncommon concern amongst crowdfunders and so I felt compelled to put my thoughts on this in one place. Assuming that ‘the thing’ is ‘the thing’ here and they’re not actually hesitant for other reasons, my response to this worry is as follows;

Whilst it’s totally understandable that people are worried about the financial situations of their friends, families, customers, professional networks etc, opening up the opportunity to buy shares in your company isn’t actually about ‘asking’ anyone for money. 

When you’re preparing an investment round, you’re not preparing to ask for handouts. You’re preparing to present a business opportunity. Whether you’re asking a VC, a fund, a group of angel investors or your friends to invest, it’s still a business opportunity.

Obviously investments carry risk, of course they do, and yes, if people invest, their capital will be at risk. However, why not treat people with the respect you have for them and give them the benefit of the doubt that they can make their own minds up? With the relevant risk warnings in front of them, and they will be, shouldn’t people be allowed to assess that risk themselves and make their own decision as to if they can afford to invest? If they say no, then don’t worry, at least you offered them the chance. 

Equity crowdfunding has totally democratised the investment landscape in that it has allowed ordinary people to share in the success of some truly brilliant companies that, until 10 years or so ago, you would never have had the opportunity to access. Yes, some companies that have raised on equity platforms have fallen by the wayside and people have lost money, and others have done fantastically well, meaning professional and everyday investors alike have seen and will hopefully continue to see a return on some of their investments. 

Reputable platforms don’t just let people part with their cash, this isn’t some sort of scheme to fool people. The platforms perform due diligence, identity checks, and people are required to provide tax info, to read risk warnings and to certify into their investment class. These platforms are considerately set up to help ordinary people join in with the fun if they can afford to, alongside the professional investors who are also registered.

Equity crowdfunding is about opening opportunities to the masses so please, don’t launch your campaigns and then make assumptions on other people's finances. Don’t deny them the opportunity to assess the risk themselves and share in your success if they want to. 

This weekend I have paid for my investments in two of our client campaigns. I decided to personally make small investments into these campaigns by assessing my own finances, assessing the level of risk and making my own decision. I’m glad I had the opportunity, so thanks to both of those companies for giving it to me.

If you want to book a call with me to discuss crowdfunding for your business, you can do so via this link - https://isqcrowdfunding.com/schedule