The importance of investor communicationMay 09, 2019
The following article has been written for ISQ by Crowdcube.
We’re often asked what we think makes a really successful crowdfunding campaign. While there are obviously many aspects to consider, building good investor relationships is an invaluable piece that can’t be overlooked.
One of the many ways entrepreneurs can communicate with potential investors on Crowdcube is through our update feature. Not only do frequent investor updates keep your pitch top of mind, but they help build trust and good rapport. Remember, investors are buying into the people behind the business, not just the business itself.
Benefits beyond funds
While securing capital is the main aim, there are additional benefits to bringing investors on board. We spoke to Giles Humphries, co-founder of Mindful chef, about his Crowdcube experience: “that one week had the highest amount of hits to the website, the highest amount of new users, new accounts set up, new paying subscribers - you just see it there and then. The real benefits are that you see a huge leap in the people trying your service.” This exposure to a new audience has proven to be a golden bullet for driving traffic and brand engagement.
Another benefit that many entrepreneurs experience is an increase in brand advocacy and loyalty, amongst new and existing customers. This is something that Giles also attests to: “The main positive for me is having the network effect of brand ambassadors who are completely behind your business.” It’s important for investors to see the passion behind the pitch, which is something you can make clear by communicating your brand values and mission in your messaging. As Giles succinctly puts it, ‘If you have a business that’s a force for good it’s a great story if it’s a great story you’ll find investors.’
Start as you mean to go on
Taking this into consideration, communicating as early as possible is essential. Ensure your marketing plan includes an initial warming-up period to reach out to your existing audience and potential investors. Once made aware of your campaign, continue building on this relationship by sending regular investor updates to keep engagement high. One of our top tips is to map these updates out within your marketing plan in order to maintain momentum.
Tax relief is a topic that should be included as often as possible in your investor communications. EIS and SEIS are massive hooks; we’ve heard countless stories of investors increasing the amount they want to pledge purely to benefit from tax relief. Many people are unsure whether they are eligible or may not have heard of it at all, so this must be made clear.
One of the best pieces of advice we can share on investor relations comes from Mairi and Martin Wickett of Witt Energy, who successfully raised over £2.39m in 2016 on Crowdcube. “Be available 24/7.” While it may seem overwhelming at times, responding swiftly to investor queries, forum discussions, or crafting thoughtful investor updates can make all the difference. Cultivating these relationships isn’t something that should be forgotten once your raise is completed. Keeping the line of communication open post-campaign is vital, particularly should you decide to launch a second raise. In the words of Mairi, “You can’t just take the money and stop networking. You can’t be complacent.”
No news is not good news
The pitch page forum is another tool used to build investor relations. Forum questions must be answered swiftly and truthfully; transparency is key. Above all else, try not to get into a longer dialogue than is necessary. Offer a call or catch-up over a coffee if a longer conversation is needed. It’s an obvious one, but if you don’t know the answer to something don’t try to pretend that you do. Stating that the enquiry is something that needs to be looked into further is a much better option than risking being caught out.
From conversations with investors, we know that they are always eager to hear more from the businesses they invest in. As mentioned, one of the key benefits of crowdfunding is growing that network of brand ambassadors. They want to feel like they are still an important part of business growth, even after the campaign ends.
Essential post-raise updates
While venture capitalists may require a monthly investor update once they’ve pledged, our recommendations are a little different. What works well for the crowd is a solid quarterly update once your campaign has ended. As your investors have likely bought-into your brand ethos and personality, updates should be in your own tone of voice. They don’t need to be formal or full of jargon.
As a quick guide to writing your first post-funding update, we suggest including an overview of the quarter, an update on financials, any challenges that have been overcome, exciting opportunities, new hires, and an insight into what’s coming up for the next quarter. If you need more guidance, take a look at our recently published Q1 update for some inspiration.
Good communication underpins a successful crowdfunding campaign. Investors both want to (and should) be made aware of any hurdles, as well as celebrating your success with you. Whether you’re at the very beginning of your campaign or going through completions, you should be constantly talking to your investors. Ultimately, keeping them close is beneficial to the investor, the success of the campaign and to your business overall.