A Regulation Crowdfunding (Reg CF) campaign takes time, preparation, and a great deal of work (if I had a nickel…). But before you begin calculating your raise target, or jotting down ideas for a campaign video—I’m going to suggest doing something else. Take a time out.

Take a minute for some introspection. Before you roll your eyes, know this: at CTC we tell issuers to be really clear on what they’re doing and why they’re doing it. It may sound like “no duh” advice, but we keep giving it. The reason why this is so important is that being as clear as possible forms the foundation of your Regulation Crowdfunding campaign strategy and implementation plan. Crowdfunding is not something you do on the fly. Not if you want to do it well.  

Consider the four steps below before you get too far in planning the mechanics of your campaign.

1. Know Where You’re Going

Before you start the crowdfunding process, your business should have a business plan. Not a draft, but a final version. If that’s not the case, take the time to work through those details first. You want to establish your business on a solid business concept, not a regulatory exemption. Potential investors will ask all the questions you anticipate, and the ones you don’t.

2. Know Who’s Going with You

Friends, family, and a few super loyal customers—even if they’re not rich or experienced investors—can invest in your company. Think about that for a second. Businesses can now make a strategic decision to offer a stake in their company with Regulation Crowdfunding. You’re not just giving them a baseball cap, coffee mug, or t-shirt with your logo and tagline—you’re giving investors a personal stake in your company. Their participation means they’ll be “invested”, in more ways than one, in the success of your company. Make sure you’ve got the capacity for following through and following your word. The last thing you want is a failed campaign amidst a backdrop of burning bridges.

3. Question Your Goal Before Others Do

How much capital do you really need? Make sure you can clearly explain how you plan to use the capital you raise. Specificity and transparency go a long way in giving investors the trust they need to help you grow your business. With the exception of your Mom, no investor will give you money just because. And if you think there’s a scintilla of a chance you plan on raising money again in the future, get good at it right from the start.

4. Map out Your Team

If your life’s purpose were to be an expert in crowdfunding you would be focusing all your time and effort on that instead of your new business. In all likelihood, if you’re reading this, you’re not. That’s why you’re going to need a crowdfunding team that will help you dot and cross all the letters you come across. (Don’t cut corners in equity crowdfunding if you want to do it right, ethically and legally. Trust.) Here’s a list of the folks you will need.

  • An attorney – preferably one familiar with equity crowdfunding.
  • A funding platform – for a Regulation Crowdfunding campaign, you have to raise funds through a FINRA-approved funding portal. Every funding portal is different and each varies in how much they charge (typically 4-10% of capital raised either in cash or securities). Each platform varies in the services they provide.
  • Financial statements – you need an independent accountant or independent auditor to prepare your financial statements. The person will need to know under what exemption you’ll be raising funds, and how much you need to raise because he/she has to prepare financial statements in different ways depending on your answer.
  • (Optional) A marketing agency – if you need help with marketing, an agency can help you create a clear, compelling story, as well as copy to reach potential investors. You must prove to your investors why it’s a good idea to invest in you and your ideas; if you’re not sure you can do this, an agency can help. But, you’ll need a budget for marketing. If you’re just starting out, you may not have one. This leads me to the next point.

One way to keep your costs low is to “DIY” your campaign. By that I mean, managing it and creating all the marketing assets you need (you still need a lawyer, there’s no DIY-ing that). But it can be challenging to know where to start, as well as all the steps involved. That’s how we at Crack the Crowd can help. We’ll soon be launching a beta of an mini course to help entrepreneurs prepare and launch a Reg CF campaign on their own. Interested? Sign up today to stay in the loop on when Crack the Crowd releases the beta (for free!).

Sign up today to participate in the beta of the Regulation Crowdfunding course (for free!).