Leveraging Grassroots Marketing In Crowdfunding
Raising capital using Regulation Crowdfunding can be a rewarding opportunity to fund a business, build brand advocates with shared values, pursue positive impact, and further explore and build business plans and strategies. However, the road to success can include challenges, particularly when marketing and venturing into public advertising to potential investors. When saying “marketing” and “advertising”, the full range of possible activities can be included, from one-on-one conversations with friends to nationwide paid advertising campaigns. Raising capital through investment crowdfunding may rely on marketing and advertising to succeed.
In The Impact Crowd’s opinion, successful crowdfunding offerings are built upon a strong initial base of support within a business’s and its owners’ personal networks, identified and mobilized through grassroots marketing. Imagine an investor seeing an advertisement for a company they’ve never heard of asking for their money. Would the investor be likely to invest without knowing the company’s founders or purpose, especially if $0 of funds have been raised?
In this article, we'll explore the intricacies of this challenge, highlight the benefits of starting with grassroots marketing strategies, and discuss the importance of marketing effectively and efficiently. We'll also explore how early adopters can create momentum and heightened interest among investors reached through public advertising later in the fundraise.
Challenges of Cold Outreach Marketing
For this article, cold outreach is defined as communicating with individuals who are not yet connected to the business or the business owners. These could be individuals reached through a variety of channels like social media or users of The Impact Crowd who don’t know the business personally. Think of cold outreach as marketing to strangers. For both startups and established businesses seeking to raise capital through Regulation Crowdfunding rules, cold outreach may present challenges. Here's a couple reasons why:
Limited or Less Known Track Record Means Trust Building From Scratch
A new or less well-known business may lack an extensive track record or visible achievements that external investors typically seek. The absence of substantial performance validation may cause skepticism among those with no personal connection to the business or its owners. Trust can be a pillar of investment decisions and may be time-consuming to build from scratch.
Strangers to Your Brand
People may tend to invest in what they know. Your business that is unknown to strangers will likely need many more consumer impressions before an investor may choose to react. This means that grabbing the attention of these unaffiliated investors can be a more difficult and costly task.
These challenges with cold outreach marketing are not impossible to overcome. However, these challenges may mean more expensive paid advertising campaigns to pursue capital-raising targets, possibly lowering the success rate. The Impact Crowd believes leveraging grassroots marketing strategies early in your fundraise could be a solution to this issue.
The Potential of Grassroots Marketing While Crowdfunding for Businesses
Grassroots marketing is an approach that may help initially overcome the challenges of cold outreach. This strategy centers on cultivating more personal connections with a target audience and forming a community with shared values around the business’s brand. Within this community, beginning with a personal network and the business’s customer base, lies the potential to uncover early adopters who could serve as a launchpad for success. Grassroots marketing can offer multiple benefits and opportunities, including:
Amplifying Shared Values
A personal network of potential investors may inherently resonate more with the cultivated mission and values to pursue a positive impact. This resonance may translate into increased advocacy and willingness to consider investing, and this grassroots momentum may also lead external investors with similar values to consider investing as well.
Building Momentum and Social Proof
Backing from early adopters within a personal network may build momentum and catalyze external investor interest. A personal network’s endorsement through investing could bring enhanced social proof, validation, and credibility to the campaign, potentially making it more attractive to those who are not yet familiar with the brand or its owners. This early momentum may better attract the broader public, particularly if they share similar values and can already see investment traction for the fundraise.
Grassroots marketing may demand fewer financial expenses. This cost-effective nature is especially advantageous for startups and small businesses that are already seeking to raise more capital, not spend more money. Traditional methods of advertising and promotion may require more substantial financial investments that may be less feasible for some businesses. Grassroots marketing, on the other hand, can leverage existing networks, personal connections, and authentic interactions to spread the word about the campaign, seeking to reduce monetary expenditures and improve engagement and impact.
Grassroots Marketing Strategies and Potential Investor Engagement
Harnessing the potential of grassroots marketing within a personal network may require a strategic approach. Here's how a business could try to captivate investor interest:
Narrate with Authenticity
Share the journey, values, and mission of the business and its owners within the personal network. This authentic narrative can help form more emotional connections that resonate with potential investors.
Tailor Business Outreach
Reach out individually to personal network members, expressing the company and its owners’ purpose and passion, inviting them to join the cause. Tailored messages can help convey sincerity and authenticity.
Engage the personal network in discussions related to the business. Seek their feedback, involve them in decision-making when possible, and cultivate a sense of belonging. This engagement may ignite greater interest among potential investors.
Offer Additional Investment Perks
Consider offering exclusive perks to early adopters or those investing above a certain monetary threshold. This sense of involvement and opportunities for perks may deepen their commitment and draw investors seeking more unique opportunities.
Host Grassroots Events
Organize grassroots events that bond the business’s mission with existing personal networks and those in the community with shared values. In-person or virtual meetups, workshops, or forums can create a sense of community that resonates with the network and may capture the interest of investors from the broader public. Consider hosting events in collaboration with another business, professional association, alumni network, or other organizations with similar values to foster even broader networking opportunities and reach larger audiences.
Attend Relevant Events and Meetups
Attend industry events, conferences, and local meetups to expand personal networks further. Engage in meaningful conversations, share insights, and let the passion behind the business purpose shine. These interactions can lead to connections with individuals who believe in the business’s mission, share its values, and may ultimately become investors in the business.
Key Takeaways to Consider
The journey of marketing a fundraise can pose unique challenges for businesses. However, by leveraging the potential of grassroots marketing early in the fundraise, a business could build momentum in a more cost-effective manner. The potential social proof and momentum obtained through transforming a personal network into a driving force can help build a stronger foundation when a company is ready to embark on a larger-scale marketing plan. Once a community of advocates with shared values is built through grassroots marketing strategies, a potentially more effective cold outreach and public advertising strategy could be considered. The Impact Crowd currently allows minimum investments of $100 per investor and uses Regulation Crowdfunding rules, which allow anyone 18 or older to invest. This means anyone 18 or older within personal networks or the general public could become a potential investor in the business.
This article may not be a complete list of all the advantages and disadvantages of all marketing strategies. However, it is intended to express The Impact Crowd’s opinions on effective crowdfunding marketing strategies and to be a helpful starting point for further considerations and strategies. Each business is unique, and it is important to build a tailored plan that fits your business and elevates your mission to pursue positive environmental, social, or other similar impact.
Are you ready to embark on your crowdfunding journey and to pursue taking your business to new heights of potential and purpose? Let's work together to create capital-raising opportunities for your business that can also support positive environmental and social change and pursue a better future for our communities. The Impact Crowd would be happy to discuss your individual business’s fundraising needs further with you, along with how you could structure your desired positive impact. You can connect with us today at email@example.com to explore how we can support your business’s crowdfunding plans! And, join The Impact Crowd to receive notifications about our new investment opportunities as well as future articles discussing impact investing and related topics.
Investors should note that investment offerings conducted under Regulation Crowdfunding are speculative, illiquid, and involve a high degree of risk, including the possible loss of your entire investment.
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