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Although only legislated in Australia in 2018, equity crowdfunding has quickly become quite the hype for small Australian businesses (SMEs). There are alternate viable methods SMEs can pursue to raise capital, however, many founders are beginning to appreciate the multi-benefits of partaking in an equity crowdfunding campaign.
In this article, OnMarket highlights the 5 key benefits of an equity crowdfunding campaign.
Key Benefit #1: Brand Awareness
Whilst you are actively raising awareness about your crowdfunding campaign, you are simultaneously raising awareness about your business. To put your best foot forward and pursue a successful campaign, you must engage the market and make them aware of the campaign. How will your campaign be successful if people don’t know you’re crowdfunding?
Part of the tactics deployed to achieve success includes digital marketing, both paid and organic. Your digital marketing strategy will aim to target and reach those who are related to your business. The most unique element about equity crowdfunding, or even crowdfunding in general, is the holistic element to the crowd. Crowdfunding has democratised investing in start-ups – no longer do you have to be a sophisticated or experienced investor, now, everyday people can invest in businesses they believe in. Due to this uniqueness, the targeting of your marketing initiatives doesn’t necessarily need to speak to high-net-worth investors like venture capitals or angel investors, instead you can market to your target audience and target profile.
In doing so, you approach individuals who can relate to the problem and solution you’re presenting. This simultaneously raises awareness of your brand and your crowdfunding campaign – offering two huge benefits for the single initiative.
Key Benefit #2: Brand Ambassadors
The individuals that invest in your business are doing so for two reasons:
a) The business interests and values align with their personal interests and values
b) The investor sees immense potential for business growth and scalability
Whether it’s one of the above reasons, or both, the investor is now your personal brand ambassador. The business success and their success are intwined, the larger the business grows, the larger their capital gains or community impact.
Not only have you got monetary support, but you’ve also built an army of brand ambassadors who will tell people about your product – and we all know that word of mouth marketing is the most impactful form of marketing. Post raise, you and your investors have one main goal in common – the success and growth of the business.
Brand advocacy is hard to come by, but with equity crowdfunding, it’s an indirect and powerful benefit.
Key Benefit #3: Customer Acquisition
Tying into the above two key benefits, your equity crowdfunding campaign increases your brand awareness, and those that invest in your company become your brand advocates. These two indirect benefits work collaboratively to increase your customer base and enhance sales growth, therefore creating the ultimate customer acquisition strategy.
By marketing to individuals who relate to your business, you invite them onboard not only as a shareholder, but also as a customer as you provide a sound solution to a problem they’re experiencing. Therefore, within one campaign you are increasing brand awareness, sourcing brand advocates, and reducing the customer acquisition costs! Boom! This is a strategic and accelerated marketing funnel that propels the progression of your business.
Key Benefit #4: Uncovering your value proposition
I’m sure by now you’ve noted that there are many benefits of equity crowdfunding, but it does come with a lot of blood, sweat, and tears. Hopefully not literally, but you get the gist. To effectively market your campaign, and achieve a successful campaign, you need to be able to clearly articulate the problem your business solves, the solution to said problem, the market opportunity, and the potential to scale and grow. You must nail your elevator pitch in a clearly articulate manner, so the audience knows why your business is a good investment decision, and why it’s relevant to the market now.
To do so, you will have to deep dive and uncover all the nitty gritty details about your business. Although this sounds like a bit of work, and it is, the benefit is a comprehensive and wholistic understanding about the industry you’re looking to enter, your business, and the community you will directly impact.
This extensive knowledge pinpoints your point of difference, and what makes you unique in comparison to other key players in the industry. Although this sounds simple, don’t underestimate the power of knowing your company story – as well as in a manner that is articulate and understandable by anyone and everyone.
Key Benefit #5: Growth Capital!
And, of course, last but certainly not least – growth capital! At the end of your successful raise, you will not only have leveraged marketing activities and strategically planned to build your brand in the industry, but you will also have secured capital from investors that you can put towards growing the business!
Whether this be:
Hiring new staff
Whatever your business needs to grow and scale, you now have the capital behind you to do so!
There you have it, the five key benefits of Equity Crowdfunding for small Australian businesses. But don’t take our word for it, take a look at what companies have to say about their journey with equity crowdfunding!