As a SaaS provider we (CleverAdam.com) do not have any opinion on when - or if - your company is ready for crowd investment. We can provide technical assistance in setting up and operating a platform, but how you use it is strictly up to you to decide. Consider us like Gmail or Shopify - we provide the service for you to interact with your investors/recipients in a streamlined way, giving you the tools needed for you to be able to fast, easy and securely handle the day-to-day operation of a crowd investment solution.
In this blog post we would like to share some general thoughts on the topic, which might inspire you
- Why raising funds online
- The different company stages
- I feel ready, now what?
- Why we haven’t raised funds yet
Why Raising Funds Online?
We strongly believe that companies raising funds online is about to become “the new normal” within fund raising. Just like e-commerce 15-20 years ago made it possible/easy to sell products online, we believe e-investments is on the same journey and showing the same trends. However, in order to keep the momentum, we believe it should be much easier to setup a successful crowd investment campaign than it is today. Raising fund is generally hard (and even harder if you are an introverted founder), so we set out to make that process a lot easier.
Reasons why you should consider raising funds online:
- You are in control and you don’t (necessarily) rely on other peoples effort
- Be able to reach out to thousands of potential investors with your brand
- Build an investor network for your company which you can use again and again and again.
- You can build communities and invite selected investors to private groups etc.
- Crowd investments can also be combined with funds from VCs, BAs, and similar
- More easily convert happy customers into loyal investors/ambassadors
- Traffic to your campaign (on your website) benefit your business regardless of investment is made or not = 2x value on marketing activities
- Ensuring brand identity across the entire process from lead acquisition to investment completion
The Different Company Stages
As a company you can raise funds at many stages: Proof-of-Concept, Proof-of-Business, Proof-of-Scale and others, and crowd investment can work fine for most stages.
Each stage contains different risks, benefits, opportunities, upsides, downsides, etc. It is obvious that the earlier the stage, the higher the risks and upsides are.
You can raise funds for your company at a very early Proof-of-Concept stage (meaning: before you have the first paying customer or before you have buying-commitment from the first customer). But, we have been on the POC stage with both CleverAdam and others own startups, and we would argue that this stage (normally) represents a level of uncertainty, so it can be challenging to present a serious and fairly documented crowd investment case.
But, this is not a statement about crowd investments doesn’t work at the POC stage - It is just based on our own experience.
From a crowd investment readiness-perspective, we in general see the chance of getting a successful crowd investment campaign like so:
- Proof-of-Concept stage: Challenging, but not impossible for the exceptionally strong case
- Proof-of-Business stage: Good
- Proof-of-Scale stage: Better
- Internationalization stage: Even better
There can be other relevant stages. This list just to show the typical approach and perception from investors.
No matter what stage you are on, it is up to you to decide whether you feel ready to raise funds. You need to tell “the story” and be able to provide compelling arguments for the projected growth of the company to your investors.
You Feel Ready - Now What?
Whether you are ready for crowd investment or not, basically comes down to six main things, all revolving around building trust in the investment case:
- Your ability to make it easy for the investors to understand the case
- Your ability to describe the business model in an easy way
- Your ability to describe the upsides/opportunities
- Your ability to describe the risks
- Your ability to describe a team who are competent and can execute on the plans
- Your ability to being honest and transparent (both in your communication and in the documents)
If you want to raise money directly from your own website, we suggest that you read this guide How to Launch a Crowdlending or Crowd Equity Campaign and Which Tools to Use. This is a very practical step-by-step guide, which is based on the assumption that you start from scratch. And please remember that your second investment round is much easier then the first one - so keep at it.
If you are launching via an investment platform (crowdlending or crowd equity), we suggest that you read this guide How to Create the Pitch for a Crowdlending or Crowd Equity Campaign as an inspiration. Depending on the investment platform, they can have a different structure and layout for the campaign description, but in any case it is an excellent resource.
It you already have made a traditional investor deck, then it will be easy to adapt to the online format provided you have followed the typical 10-slide structure from Guy Kawasaki.
Why We Haven't Raised Funds Ourselves (yet)?
We are at the Proof-of-Business stage. As per November 2021 our company CleverAdam.com ApS has not raised any funds yet - offline or online. Does this means that we do not believe in our own concept? No, of course not.
We want to raise funds as soon as we have a very strong indication of product-market fit. The current company growth have been based on bootstrapping and generated revenue in the company itself. As we are still very early in our journey, there's still a lot of kinks and tweaks to be made to the business model, customer acquisition strategy and product roadmap before we can scale up.
If we take in funding too early we will need to give up too much equity for the low amount of money raised which is not good. So once we have product-market fit it will be much easier for us to get the desired funding for scaling up - without giving away all the equity to investors.
Do you have any thoughts on this topic? Feel free to write us at Hello@CleverAdam.com - We would love to talk to you and to hear about your experience with raising funds online.