The do’s & don’ts of securing a lead investor for your equity crowdfunding campaign

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No matter how simple you keep things, equity crowdfunding campaigns can become a game of chance, psychology, and who dares first. A lead investor (LI) plays a significant role in the success, direction and visibility of your campaign. 

A lead investor might be an individual or an organisation. Being a lead investor doesn’t necessarily mean they invest the most, it just means their contribution will be greater and their role will be more proactive. If their influence is broad, where they go, others will follow. They will pay dividends not just in the interest they’ll inspire, but in the guidance, representation and network they provide.


What should I look for in a lead investor?

For want of a better phrase, you’ll be in something of a beggar and chooser situation when securing your lead investor. An individual or group willing to give you the capital and assistance you need is never something to thumb your nose at. But - that’s not to say you shouldn’t be discerning when establishing a partnership. Here are a few things to make sure of before you sign on the dotted line.

  1. Your lead investor should have knowledge and experience of your unique sector. Go with an expert, not someone with success in other fields wanting to “have a go” at a new industry.
  2. Your LI’s ethics should roughly align with yours. It’s important to trust you won’t be pressured to compromise on your ethics, pursue directions you’re not comfortable with, or part with the core principles of your business. 
  3. Your LI must be willing to donate time, not just money. The capital they invest is only part of their role as a lead investor. Make sure they have the time to actively maximise your potential rather than sitting on the sidelines.

When do I start approaching lead investors for my campaign?

Naturally, you’ll need to have an investor on board before you launch, so they can help you with your ongoing campaign.

Your potential investors will expect to see two things upon agreeing to meet with you: your offer document and your video pitch. These need to be polished, perfected and rehearsed before you reach for the phone/LinkedIn messenger. There’s not much point reaching out, getting them excited, then having to scrabble together a presentation before they get bored or forget (or worse - approached by another campaigner with a wrap on their video pitch). 

Some will say it’s ‘never too early’ to start building relationships, but remember, the types of people you’ll be approaching are busy. Popping up with your ‘something in the works’ that’s ‘not quite ready yet’ may get them excited, but they may not have the patience or the headspace to engage with an unfinished idea. Maya Angelou said, ‘they’ll forget what you said, they’ll forget what you did, but they’ll never forget how you made them feel’. If how you made them feel is ‘irritated’, that impression of you may stick.

How should I contact a lead investor?

Things are different to ten years ago. Previously, a phone call was considered correct etiquette, and emails were regarded as informal and impersonal. Now, thanks to the abundance of non-verbal ways to contact people, a direct phone call can be seen as just that - too direct. Some may even consider an unscheduled phone call from a stranger aggressive, especially as it’s unlikely your investor will have a direct line publicly advertised. Using backdoor tactics to get potential investors on the phone (fibbing to PAs that you have an appointment, for example) is common in sales, but bad form when sourcing investment.

Opt for a brief, professional email, or a social media channel that you know your target investor uses often (they may post regularly on LinkedIn, or have a strong Twitter presence). State your intention right off the bat, keep it to one or two descriptive sentences, and make it clear you are asking them to be your lead investor. No beating around the bush.

What do I do when a lead investor responds? 

Your next step is to arrange a face-to-face meeting. Your potential investor may prefer you go to their office or a venue of their choice. If not, choose a location that isn’t too stuffy or formal. You’ll want to talk business, but also build a personal connection, and sharing a coffee or lunch is a good way to do this.

After your meeting, it’s on you to follow up thanking them for their time, and any updates you might have. Get them on the guest list for any company function. After a week or two, propose a second meeting to discuss any thoughts they may have had or questions they’ve come up with. You should have an open enough relationship to ask them directly for their feedback, and whether they would consider becoming your lead investor. If they say no, don’t be disheartened. It’s an excellent opportunity to understand their reticence and address any causes of concern they’ve highlighted. 

What should I do if my investor says yes?

Break out the champagne! You’ve just achieved a huge milestone for your campaign. The key thing now is to continue fortifying that relationship. You may wish to invite your new lead investor for a thank you dinner or drinks, but gauge their personality. Some are extremely personable and down for all the socialising aspects of business. Some are more introverted or just extremely busy, in which case, a token thank you gift like a bottle of wine or whiskey is a nice touch. 

Make sure they’re continually kept in the loop and involved in all campaign strategy meetings and shareholder activity. 

For comprehensive guidance and coaching on recruiting your lead investor, as well as access to a dedicated platform where investors can browse equity crowdfunding campaigns, chat to us.

James Brannan

Director of Operations at STAX

Understand the Risks

Under crowdfunding legislation in Australia, STAX is what’s known as a ‘gate keeper’. That means we’re obliged to check certain company details on your behalf. Read more about how we select companies here.

Like anything in life though, investing on STAX comes with risks. While we carefully screen every company, we can’t actually guarantee their success. Nor do we give any investment advice or take responsibility for losses. We’ve covered the general risks here.

All views, investment or financial opinions expressed are those of the author and do not necessarily reflect the official policy or position of STAX. The information contained in this post is not investment advice or a recommendation to buy or sell any specific security.

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