My previous equity crowdfunding blog discussed why companies decide against it. Now it's time to think about the first steps for those who have fully considered what it entails and decide to go for it.
Crowdfunding is like everything else in life - the chance of doing it successfully increases if you are surrounded by the right people. So once you have decided to go for the raise the absolute first step for planning for success is to build your team.
The team for pulling off something which has the potential to deliver so many benefits to your business requires many people. So here are five team members you should start thinking about right away.
1. The Platform
There are a number of platforms to choose from and they are not the same, so review the merits of each one carefully. The platform is central to your entire campaign so picking the right one is critical. All of them will have positives and negatives, and you need to consider all options.
Full disclosure - Harper Macleod has partnered with Crowdcube, which is a world-leading platform. Given that over £500 million has been pledged via Crowdcube and it has 700 successful raises under its belt it can bring a host of experience to your deal.
Should a company work with both Harper Macleod and Crowdcube it can save on the overall cost of conducting their crowdfunding campaign.
2. In-house team
After you have picked the platform, consider the skillset within your company's team and their capacity. Crowdfunding successfully needs experts in a host of areas such as marketing, financial and legal.
Even if you do have the in-house experts to carry out the various required functions, do they have crowdfunding experience? Do they have the time to devote to the crowdfund and who is going to take care of the day job when half the team is focusing on the raise?
If the company does not have the skills or the time, then you must reach out to the crowdfunding ecosystem and get help. In fact, even if there is an in-house team with the time and skill, consider if the raise could be done better by getting external help.
3. Crowdfunding consultants
Crowdfunding consultants vary in the services they perform, and range from helping educate a founder on the practicalities of running a crowdfund to dealing with all elements of the crowdfund.
The extent of the company's resources and capacity will impact on what type of consultant will work best. For example, if the company has a small in-house team who are busy with the day job or lack the expertise to work through the financials or put a great video together for the raise, it may be they want a fuller service from a consultant.
Your company needs to be fully finance ready. It may be that the company has got the skills in house to develop a funding strategy, build a pitch deck and so on, however if not the company should reach out and bring in experts to assist with these areas. As is the case with all advisers, when picking financial advisers be sure they have the experience to deal with a crowdfund raise.
When a company raises money from the crowd there are numerous legal factors to consider throughout the process. For example, before launching a crowdfund the company needs to gets its house in order and get crowdfund ready. Thereafter, the company needs to think about how the various shareholders are all going to work together for the benefit of the company in the short and long term. This is particularly the case as crowdfunds are getting increasingly more complex. Balancing the different drivers of all interested parties requires careful thought and market insight.
The team at Harper Macleod have helped clients carry out some of the country’s most successful and groundbreaking crowdfunding campaigns, however, no matter who you pick as legal advisers for the crowdfund make sure they have in-depth understanding of the investment landscape and can provide specialist crowdfunding advice.
Get in touch
If you are thinking of an equity crowdfund, and would like advice from lawyers who have been part of a significant number of successful raises, please contact Jo Nisbet to find out more.