Attracting Equity Crowdfunding Investors – Whales vs. Minnows
When it comes to attracting equity crowdfunding investors it’s more than just another numbers game. While determining the best path to attracting equity crowdfunding investors is steeped in math, the bigger picture tilts towards logic. Such logic starts with reaching investors everywhere they are like Market Watch – a sister publication of The Wall Street Journal.
The first factor to consider is your funding goal. The most popular equity crowdfunding goal seems to be 10K-107K with $1,070,000 a close second.
Then there’s the minimum investment. The popular range runs $100-$500 as an established range which, through simple math, is startling relative to the funding goal.
That’s because if you make certain assumptions you’ll need to attract hundreds if not THOUSANDS of investors to reach a funding goal. Those assumptions are: Every investor only invests the minimum making your calculations for success based on your top funding goal divided by the minimum dollar amount which gives you a very conservative number of minimum investors needed.. This gives you a very realistic picture in terms of your goal in attracting equity crowdfunding investors.
It goes without saying that while there is a minimum there’s nothing to stop an investor from reaching the maximum.
There is an accounting principle known as conservatism. While ordinarily attributed to the recognition of income and expenses, this mindset should extend to the planning and execution of attracting equity crowdfunding investors.
Considering the upper range of a crowdfunding goal as $1,070,000 and the upper range of minimum investment of $500, one would need well over 2,000 investors to reach their funding goal and cover platform fees. No wonder why so many equity crowdfunding campaigns come nowhere close to their funding goal.
You ARE trying to reach your maximum funding goal, aren’t you? If you’re not then you should be.
“Swing for the fences”
“Go big or go home.”
Nobody failed in a business venture because they had too much money to work with. Ask Apple or Microsoft.
Obviously the goal in attracting equity crowdfunding investors is to attract as many whales as possible.
Capturing twenty whales will get you to your equity crowdfunding goal far faster than catching over 2,000 minnows.
While the very definition of equity crowdfunding is to attract as many investors as people, your focus should be on attracting equity crowdfunding investors who are better positioned to invest larger sums of money.
Looking beyond the money is the logistics; would you rather deal with 20 investors or 2,000? I can assure you that working with 20 whales — who are rightly assumed to be astute investors with financial acumen and superior intelligence – will be far easier than interfacing with 2,000 investors, answering 2,000+ of their emails explaining what a P&L statement is, why sales fell short in the 4th quarter, etc. etc.
In short, when attracting investors, don’t turn away any minnows you catch in your net but make sure you’re whale hunting.
As the saying goes, the fishing is best where the fewest fishermen go. We know all of the best places and ways to help you catch whales, minnows and every species of investor in between.