It’s not always easy to gauge how the crowd will react to your equity crowdfunding campaign. Some attract investment like a magnet while others can flop, or simply stall after an initial burst of post-launch interest.
While there are a huge range of factors that can determine the success or failure of any campaign – and far too many to go into in this blog – there is a golden rule:
Never set your funding target unnecessarily high, at least on your campaign page. The simple reason is that your campaign will look like it’s underperforming, even if it isn’t.
Let’s say your business needs £100k to grow, but set your funding target at an ambitious £250k.
If you open your campaign with £50k in cornerstone investment already pledged from, say an angel investor, your campaign page would show that you had raised just 20% of your funding target.
But without generating some further momentum, your campaign could get stuck around the 20% mark. Investors often won’t have confidence in your pitch if there’s no apparent demand, or to put it another way, won’t experience FOMO!
Setting a £100k target instead, with the same amount pledged would see your campaign open at 80%, giving investors more confidence, and your company a much greater shot at success.
Some founders might think that setting a more modest target risks capping the amount of investment they can raise. But campaigns can go into overfunding, meaning that you can raise more than 100% of your stated target. In fact, it’s not that common, but it happens sometimes where we see campaigns go into 200% and 300% funding.
Having said this it’s important to also note that campaigns can stop funding as soon as they’ve reached the 100% target - which just adds an extra layer of FOMO to investors watching the raise from the sidelines.
So before launching your campaign, think about how much pre-pledged support you have and how much you really need to raise – both will help you choose that funding target sweet spot.
While this won’t guarantee success for your campaign, it will certainly bolster your chances. Should you find that your campaign has started to stall, check out our piece on how to rescue a failing campaign.
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