Crowd-Sourced Funding (CSF) is a fantastic new way for companies to pursue alternative funding for their business. It allows for businesses to advertise and raise capital for their enterprise through a licensed intermediary (like Birchal) and build a base of brand ambassadors to help them achieve their next phase of growth.
Simply put, CSF is well suited to strong brands that are close with their customers and are already regular communicators with their audience. A CSF raise doesn't simply generate funds for businesses, but continues to build existing brands and establish communities of long-term advocates.
Companies that tend to excel in the equity crowdfunding world are:
Active online, with an engaged audience that follows their progress
Clear on what their best customer/user acquisition channels are
Coming to the campaign with company traction that resonates with the investors interested in their offer.
Different companies attract different styles of investors, and as such every campaign is unique. You may be raising funds from those living locally to your business, customers who already buy your product or may be approaching a larger audience who are value aligned with your vision and goals.
Pro Tip: If you think your company is too early for an investment round but you are keen to get traction in the market, check out our sister platform Pozible!
Birchal's Tips for Success
Since our first campaign in late 2018, Birchal has hosted 75+ successful capital raises and raised more than $50 million dollars from 40k+ investors for Australian companies (as of May 2021).
Our philosophy is that Equity / CSF crowdfunding is the perfect funding pathway for companies with a strong consumer proposition - we consider this our niche - as the Birchal team has a mixed combination of commercial, communications and promotional backgrounds that helps augment the efforts of companies we support.
However, there is scope for businesses that are not consumer focused to excel on the platform - but they still need to match the requirements stated earlier in the article.
Want to see what industries did well in 2020?
When is a good time to do a CSF (Birchal) Round?
We often say that to run the most effective and efficient CSF campaign, companies should ideally be past a family and friends round and seeking pre-seed or seed funding. However, there are exceptions where companies at a more developed stage choose to undertake a CSF raise if it aligns more closely with their brand than traditional funding avenues.
It's also important to consider that you will need to provide a company constitution, subscription agreement and an offer document as part of your raise that will include information about your business model, strategy, the market you operate in, and financial performance (typically your most recently completed financial year).
For companies that are just starting up, you may not yet have these frameworks in place - this simply means that equity crowdfunding might be an avenue to explore further down the track when the business has more traction.
If you feel your company is at a stage that is ready for equity crowdfunding, please submit our eligibility form on the Raise Investment page so we can get in touch.
Maybe this isn't for me... where to now?
Equity Crowdfunding is one of many ways early stage companies can raise capital in Australia. To explore other funding options out their for early stage ventures, check out 12 Ways to Raise Capital in Australia by Smart Company below.