How to Stand-out from the Crowd when Crowdfunding

written by MO.com Subject Matter Expert Joy Schoffler

The Jumpstart Our Business Startups Act (aka- the Crowdfunding bill) is officially the law of the land, meaning startups looking for funding have new ways to raise capital.

The Crowdfunding bill will allow companies to raise small equity investments from individual investors, allowing even non-accredited investors the ability to legally invest in companies that were once only available to accredited investors.

The changes to the law have created a great deal of hype with many claiming crowdfunding to be the solution to cash-strapped startups woes. While the bill does give promising startups a new way to raise equity, it also increases the competition for investor attention.

The Due Diligence Process

In the past, most startups seed funding rounds came from friends and family or local angel groups who knew the company leadership, or at the very least, knew people in the community who could “vouch” for the founders in the vetting process.

Crowdfunding changes this as potential investors will now be doing most of their due diligence online. As a company pitching to investors on crowdfunding platforms not only does your profile have to be perfect, everything about your online presence has to be polished, professional and set to impress.

Investors will be monitoring your profiles and reporting back to the group, similar to a penny stock company chat board. If you post anything of interest, you better believe investors are paying attention.

The smart investors evaluating companies are going to look at everything about the company including their founding team’s online profiles. What comes up in their search results will matter and will more than likely be the key to getting funded.

Publicity – Increased Credibility = Increase Funding

As a company looking to raise funds on a crowdfunding platform, the single most important factor is going to be how credible you look to an investor. Without credibility, it does not matter how large your market is or what your projections are. No one believes a source that has not been validated. A cleverly crafted publicity campaign can provide the third party validation that there is both a market and a need for your idea. Furthermore, it shows investors that you are considered an expert in your field by the journalist community.

Crowdfunding companies should do all they can to secure press coverage for their firms. While publicity campaigns often take a good deal of time and effort, there are a few things founders and their marketing team can and should be doing:

• Set news alerts for topics critical to your industry. Once you have identified a story, reach out to journalists on twitter or email and offer a unique prospective or data point on their story.

• Monitor HARO (Help A Reporter Out) and the Twitter streams of journalists in your industry. Journalists are always looking for unique prospective or experts to offer insights.

• Report your milestones to local business journals and newspapers.

• When interviewed, most reporters will include a line or two about you and your business even if you are just giving them a data point. Make sure that “one-liner” reinforces your standing as an expert.

• Discuss the selling points of your business where you can. For example, crowdfunding is a very popular topic right now with the passage of the crowdfunding bill. If you are interviewed about using crowdfunding to launch your startup, make sure to discuss why you see a market for your product or service, always giving data points and discussing what makes you a credible source.

Every positive press mention you receive is one more link to add to the press section of your website and deal room. Quantity will matter.

Once you receive positive press mentions, do everything you can to make them go viral by sharing your good news. Not only will you have the opportunity to possibly get 2 or 3 stories out of one, but the outlet that published your story will also love you for helping them drive traffic to their site.

Get your Social House in Order.

Spring Cleaning. One of the first steps investors are going to take once they have determined they are interested in your company is to research your social profiles. Like it or not, your LinkedIn, Facebook and Twitter account will now be your first impression.

If you have a large number of questionable pictures or posts, take them down. Your friends will matter. Consider doing a digital “spring-cleaning” effort, before a fundraising effort. Remember, when in doubt, leave it out!

Get Connected. Are you an influencer in your industry? Do you have a following of important connections in your industry? Now is the time to start connecting with influencers. Repost and comment on their content, ask questions, start engaging them and building a strategic following. Your industry clout will matter.

A Word of Warning.

Having been part of the founding team of several successful startups, I know all too well the head-in-the-clouds speech that is used by some well-meaning team members who really do believe their idea is the next Facebook.

The fact is the new law is very clear that companies will be held liable for “Misstatements and Omissions.” According to the Senate version of the bill, if a company representative “makes an untrue statement of a material fact or omits to state a material fact,” they will be held liable. That liability can include fines, and jail time in extreme cases.

While social media and press mentions will be a wonderful tool to spread your message, they will also be a permanent record of your misstatements and omissions. So when being interviewed or using social media, make sure you are giving an accurate account.

Joy Schoffler is the Principal of Leverage PR, a Publicity firm that works with growth stage businesses and thought leaders from throughout the nation. Joy and her team work with companies from a variety of industries ranging from technology to consumer products and real estate, performing a broad range of services from full service public relations and social media management to publicity training services for marketing staff and startup leadership.

Joy’s background is a bit unique in that she used to raise capital for a living for early stage technology startups and institutional grade commercial real estate. One of the main ways she was able to help these firms experience tremendous success, including making the INC 500 list multiple times and raising over $20 million in capital, was through creative PR strategies. Joy found it was much easier to raise capital if the leadership of the firm were viewed as experts in their field.