How We Raised $11M from 8,000 Investors
We have 8,796 shareholders on our cap table. That may sound terrifying to you but, to me, it sounds like $11M raised from common stock at a valuation we selected.
In the last two years, StartEngine has raised over $11M ($11,196,603 to be exact) through equity crowdfunding, on our own site. Talking about this raise can definitely feel a little meta (“it’s like if Kickstarter did a Kickstarter!”), but when you spend all day, every day telling entrepreneurs that equity crowdfunding is the best, most effective way of raising capital for your business, it’s inconceivable that you’d then pick up the phone and call a VC.
Our current fundraising round is the second Regulation A+ offering we’ve raised from the crowd over the past 2 years. As the CMO at StartEngine, a big part of my job is to manage this raise. I’ve spent a huge amount of time implementing strategies that have worked, failed completely, and required some… iteration. Here’s how I’ve helped StartEngine raise $11M from over 8,000 people.
It can’t just be emails.
When you decide to raise money from the crowd, every non-marketing member of your team will have one big idea that they share early and often. Emails! Emails in the morning, emails on the weekends, emails when a person begins to invest, and emails to encourage them to invest again once they already have.
In some ways, they are right. Email marketing is a big part of any equity crowdfunding campaign, but there are some caveats.
Email #1 won’t immediately result in $1M.
Neither will email #2. On average, it takes between 5-7 “touches” for a person to actually invest. When we launched our current offering, we expected that a flood of investments would come in immediately upon hitting the proverbial “go” button. But that didn’t happen.
It turns out, people were confused. They didn’t understand the difference between the current campaign and our first raise, and they thought that we had already raised the funds we needed for our business. In our first email, we failed to tell the story of why we were looking for additional investment, instead, we cut straight to the call to action.
Instead of throwing our hands up, we built a narrative and rethought the story around our raise. We focused on people-centric stories from our company events. We hosted a webinar with our CEO to discuss our financials and plans for the future. And, yes, we sent more emails.
Segment and personalize.
We have a community of 225,000 users and investors, and a strict set of guidelines for all marketing we do on behalf of companies. These include emailing our community when companies launch, at certain milestones, and updating them about campaign progress after the raises are over.
In short, we have more than 7 days per week worth of messages to send to our audience and raising money for ourselves added another weekly call to action that we, frankly, didn’t have room for. To avoid upsetting customers, annoying investors, and failing to achieve our mission of helping entrepreneurs achieve their dreams, we very quickly learned the value of segmentation.
We took our audience of 225k+ and broke it down into segments, based on user activity on the platform, the number of investments they’ve made, and whether they are our shareholders already (you’d be surprised by how often shareholders decide to invest again in your business if they believe in you). Based on these categories, we selected how often to message people and the types of messages they receive.
Raise your round of funding through Facebook ads.
If you have an ecommerce business, you know that Facebook is keenly aware of your margins. Facebook does not seem to know the margins of an equity crowdfunding raise. Unlike using Facebook ads to acquire customers to purchase a product, acquiring an investor doesn’t come with a fulfillment cost for every order.
We’ve seen companies raise millions of dollars through highly targeted Facebook ads, and StartEngine isn’t any different. On average, we raise between $50,000 to $100,000 per week just from Facebook ads.
Acquire investors while you sleep (aka, productize!).
Equity crowdfunding can be exhausting (though, not as exhausting as building a company only to lose control to VCs!), and you need to find ways to acquire investors while you sleep. When we first launched our raise, we were heavily reliant on emails and updates.
If we posted an update, we’d see an increase in the total raise. If we sent an email, we’d see an increase. But without these proactive marketing efforts, we weren’t getting many investors just coming in on their own.
Because our current round is $9M, we knew that this raise would not be a short-term endeavor, and we needed to find a way to increase our baseline weekly investments. We looked at the user journey for investors, and identified areas that could deliver passive investments to StartEngine, without decreasing investments to the other 85 companies on our site.
The first productized call to action we added was on the thank you page after someone invests in a company. Previously, it just had a summary of the investment and a few disclaimers.
We added a new banner to that page that says “Invest in StartEngine and earn bonus shares when investing in participating campaigns,” referring to our Owner’s Bonus perk. It was a simple idea (thank you, Ryan D) that delivered huge results. In the first 8 months since implementing the “thank you invest,” as we affectionately call it, we received $1,282,891 in investments.
The best part? As our overall business grows and more companies raise funding, more investors see this thank you page. Some of those investors then convert to StartEngine shareholders and turn them into lifelong customers. It’s a beautiful circle of life at the StartEngine-scale. Check out the banner below:
Mobilize your investors to grow your business.
When I talk to companies about equity crowdfunding, I always explain that the benefits of your (potentially thousands of) investors go far beyond the monetary value.
These people become your brand ambassadors! They are your most valuable customers. However, we realized a few months ago that, despite preaching this daily to founders, we weren’t doing anything to activate our own shareholders to propel our business.
Howard, our CEO, came up with the idea of offering to extend our Owner’s Bonus perk by 12 months to all investors that made 2 investments within the first 15 days of investing in StartEngine. Here’s what investors see on the thank you page after investing in StartEngine and earning the Owner’s Bonus:
We made this change in November, and within the first month of implementation, our shareholders invested $786,824 in 33 different companies on StartEngine.
This is all a long-winded way of saying – equity crowdfunding isn’t easy, but it’s worth it. People talk about wanting “strategic investors,” but there’s nothing more strategic than having thousands of your customers become stakeholders in your business.