When it comes to private equity investments, whether it is via an existing financial services player or an investor or equity crowdfunding platform there are two distinct ways of gaining investors.
- Serendipity. This is the build the offering and they will comeapproach. You prepare your pitch decks and Information Memorandum or offering document and you send it out to everyone you think maybe interested and then sit back and wait for the ones that are interested to contact you. The same can be said of embarking on a continual stream of pitches to all and sundry, including known private equity investors, on the hope that someone will grab your opportunity while browsing or considering several other private equity investment offers. The approach investors will use in finding your offering is serendipity. Serendipity is defined as the act of finding something valuable or delightful when you are not looking for it. Relying on serendipity has a lot lower success rate than a full 9 step – Investor Aggregation System but you may get lucky!
- Investor Aggregation. This is a process that starts long before the offering materials are prepared. Investor Aggregation is the gathering of private equity investment for an entity seeking capital. While every entity doing this may have different processes there are nine generally accepted steps from beginning to end. The end being investors who are now your shareholders with share certificates and regular updates.
Lets look at Investor Aggregation a bit more closely.
- Pre-Launch there are 5 steps. The pre-launch can start months in advance but normally it lasts for three to five weeks. In the beginning you can give people a hint that “something new and exciting” is about to happen in your world and that you will be keeping them posted as you hope they can assist. This builds background anticipation. Interactions may also help you define the products and the hook which is an important part of the pitch. Creating buzz is what it is all about in the pre-launch stage and as you move towards launch you can answer any objections people have and improve your story and team to match. During this time you need to build a good list on Mail Chimp or whatever list system you use. The steps are Plan, Prepare, Recruit, Attract and Enthuse.
- Launch there are 3 steps. The launch is when people can actually start contributing money. Up until now you have only been able to get commitments and indications of support. Social proof plays an important part here. People need to see that others are contributing. The length of the campaign also provides scarcity. People know if they wait they may miss out on a share price while investors are being aggregated. The Steps are Promote, Engage and Accept
- Post Launch there is 1 step. Normally this is as long as it takes to deliver on your promises. With equity raises you need to deliver the share certificate and use the money as you said you would and deliver value for the shareholders. Private equity investment may be needed again so you have to keep investors updated and happy. The last step is Deliver.
If you have a raise or a platform that you would like to be guided through or handled for you on an investor aggregation platform or equity crowdfunding platform please fill out your contact details on the right.
Paul Niederer is one of world’s leading authorities in equity based crowdfunding investments and raisings and constructing collaborative funding solutions. He has personally been involved in over $75 million of transactions with 90 different companies seeking capital.
With the intense interest worldwide in EquityCrowdfunding Platforms, and Collaborative Funding Platforms Paul is involved in consulting to a number of parties on how to structure their funding portals, processes and regulations to have successful raises with a fair deal for investors and stakeholders.
He regularly presents seminars on on a number of topics including Collaborative Funding, Crowdfunding in 2020, Investor Crowdfunding: How to run and manage your own platform compliantly and successfully, The Democratization of Capital – Why it is happening now and how to handle it and Executive and Management Briefings on Crowdfunding.
Paul has spoked at a number of events worldwide including the annual Crowdfunding Bootcamp in Las Vegas, the Crowdfunding Asia Summit in Singapore, INSME Academy’s “How Small Businesses Can Embrace Crowdfunding for Success!”, the WASME 19th International Conference on SMEs in Durban, the Crowdfund Investing Innovation Forum in Orlando with the topic “Fraud and the Crowd” and an International Business Angels Event in Amsterdam.
His experience is with both accredited and unaccredited investor raises. While many jurisdictions have platforms running with only accredited investor raises Paul has had extensive experience in managing both accredited and unaccredited raises with both investor types often in the same raise. Internationally he is known as “Mr Governance” due to the fraud free reign he managed while day CEO of ASSOB, the world’s oldest equity crowdfunding platform. He as spoken in minimising fraud in equity based crowdfunding transactions a number of times.
Paul lives south of Brisbane on Australia’s eastern coast and relishes the opportunity to discuss peer to peer finance developments and any moves towards the democratisation of capital.