Some of the advice young companies receive seems so obvious – and yet it is very easy to lose it out of sight.
From time to time we are approached by companies that believe crowdfunding is just another term for raising money from deaf, blind and dumb individuals. Yet, it is not. Crowdfunding is a statement rather about channel and method, than about the person with the cheque. This person can be anyone – including more educated or sophisticated investors or specialists in your company’s field of expertise. So, don’t expect them to just throw money at you.
Crowdfunding with internet as its main channelheavilydepends on trust. You, the entrepreneur, have a good idea, concept, or even already had a good start with your company. This may convince others (investors) to follow you. But you need to show it! In a credible way. Keep in mind that no one beside you knows your company or project well. However, others may know your industry, business model, type of customers, technology or other risks. So your job is now – in the fundraising period – to convince them, and overcome all the doubts and answer all the questions. Crowdfunding is a beauty and a beast – it can make you a king but you need to put in effort and also face some ugly truth or harsh feedback on the way. Though, if you are committed and your business model has a justification for existence, you will make it.
Crowdfunding is about building trust with strangers. Trust… Yes, what about your trust? How do you know which information you can share? Which insights do you want to be out there and which not? Benoit Leleux, my B-School professor in Entrepreneurship at IMD, himself seasoned VC / Business Angel expert, said something in the tone of ‘If your business idea can be copied just by someone hearing about it, it’s probably not worth pursuing it!‘ He stated this in response to the question of whether you should be afraid of giving your business plan to a VC without him signing a Non-Disclosure Agreement. However, this appears well transferable even to companies progressed beyond startup stage. In (business) life, few companies fail because of loss of information / exposing their plan – rather because of lack of execution. Furthermore, if you are successfully running or starting your business, you are anyway out there, talking to anyone about your business and trying to raise attention. And people know that you are (or believe to be able to be) earning money with it.
SO, yes, think about what you put on internet platforms, but try to step a bit back and consider which of your information is REALLY that valuable that it NEVER should get out there. One more point to think about: as business progresses, reality tends to turn out very different compared to most advanced business planprojections. Thus, half life time of your ‘critical’ information is overrated. And much of your business is about YOU, YOUR SKILLS, YOUR RELATIONSHIPS, YOUR PRODUCT/SERVICE and the ATTENTION YOU GET.
Keeping this in mind, don’t be afraid of sharing information to some extent with others. In the end, both of you have something to win and something to lose! Building TRUST with your potential investors is essential for your success, and at the outset they know NOTHING, you (almost) EVERYTHING. You may have doubts sometimes about your chances, what do you think an investor must feel now? Get him on your side of the table!
A sufficient short summary of rules for pitching and ‘after sales service’ in fundraising you find for instance in the blog of Crowdcube: