Securing cornerstone investment
A version of this blog post was originally written for and published on the Crowdcube website.
Crowdfunding is a fine balancing act between finding significant cornerstone investors who will move you up the % bar quickly and a number of smaller investors who will make up your crowd.
Securing cornerstone investment is crucial to the success of a Crowdcube campaign. It will help to raise the profile of your campaign and support the creation of a more compelling investment proposition for the crowd. Look at it this way, if serious investors are willing to put significant sums of money behind your project, it can provide validation and makes your business more attractive to newer investors who might still be learning about your business and the world of crowdfunding.
So where do you find your lead investors?
Examine your existing network.
Start by looking at your own network; friends, family, mentors, your local business community... It will be easier to approach people you know and trust. If they aren’t likely to be investors themselves, ask around and see if anyone can facilitate introductions to the right kind of people. A referral from a mutual acquaintance can go a long way. Especially for larger campaigns, don’t forget to engage with your professional community, for example, your LinkedIn contacts. If you can connect with other business folk where there is some complementary opportunity to work together, even better.
Ask for feedback and advice
Make a point here about identifying a handful of key people in your network and ask for advice and feedback. You will generally find this leads to investment in some way.
Research your wider network
It’s also worth doing some research and looking for angels and venture capitalists who have a track record in investing in similar projects to yours. Once you have found them, you could connect with them on professional networking platforms such as LinkedIn. Similarly, you could approach entrepreneurs in your sector who have recently raised funding and ask them if they’ll put you in touch with some of their investors.
Attend networking events
Networking is also very useful in the run-up to a crowdfunding campaign. Try to attend as many events as you can and refine that elevator pitch to get your point across elegantly but efficiently.
Know your opportunity
Once you have identified your potential cornerstone investors, you need to convince them to part with their cash and bet on you and your business. You want them to take you seriously, no matter how far back your relationship goes, so now is the time to perfect your business acumen.
Prepare an investor deck which clearly explains the investment proposition. This should include an introduction to your company, the market it operates in, some key financials and most importantly, an explanation of how you plan to deliver a return on investment.
When you arrange meetings with your potential investors, try to memorise a few key metrics so you can demonstrate that you are running a business for profit and are fully up to date with the economics of your project.
Ultimately, you want to surround yourself with people who believe in what you do and want you to succeed as much as you do. Your lead investors will not only help your campaign succeed, they will also be instrumental in the success of your business.