I think you should get naked.
There’s a reason why people have nightmares about being naked in front of a crowd – it’s because they hate the idea of being that vulnerable. As an entrepreneur, it can be even more daunting. Your success or failure depends on what that crowd decides, and you’ve likely been through a pitch or two, some of which may have been unsuccessful. So when it comes your turn to do so again, it’s tempting to feel defensive.
But you have to get naked for money.
Of course, I’m not being literal when I say this. I mean that if you want buy-in from a crowd of investors, then you need to go out of your way to be transparent with them. Transparency is paramount, and there are two reasons to do this.
Reason Number One: People are Buying YOU
I’m speaking as a fellow entrepreneur. What’s essential to keep in mind here is that you aren’t pitching, you’re marketing. And at the core of your strategy is putting yourself out there, fully and transparently, in order to pass the strict requirements equity crowdfunding portals put in place to make sure you’re fit for their equity portal.
If you’re pitching venture capitalists, chances are that you can assume some basic understanding of your company or industry. You need to show that you’ve done your homework, but you don’t necessarily need to explain it all. You’re speaking to an informed audience that means their risk in taking your company on is diversified.
With equity crowdfunding, you’re starting from scratch. Your potential investor may or may not know your company, may or may not know your industry, and may or may not have faith. They aren’t investing simply on the merit or potential of your idea, they’re buying YOU. That means complete and exhaustive visibility, because these investors are a different kind of savvy – they’re digitally savvy. You need to proactively share everything about yourself and your company, and make sure your messaging and exposure is managed. If these new investors find nothing on your company and are given no information, alarm bells will ring, and you’ll fail. For more information on how this plays out as a marketing strategy, click here.
Reason Number Two: You Are Not A Beautiful and Unique Snowflake.
The rules that govern every company, public or private, apply to you, casual and cool company culture aside. Coca-Cola Co ($KO), Wal-Mart ($WMT), Salesforce.com, Inc. ($CRM), Alibaba ($BABA) and Facebook, Inc. ($FB) are held accountable for their compliance and need to be aware of the regulatory environments they’re operating in, and you’re no different.
In business, silence is sometimes cause for suspicion. In this case, transparency is a strength, and by far the best way to protect yourself, to make your funding round successful, and to stay compliant with the SEC. A few weeks back, the SEC announced the first equity crowdfunding fraud case. While the story is still playing out, penalties are likely to be stiff, and damaging to the reputations of all involved. So it’s clear that proactively playing by the rules is paramount, and yet people so idolize new companies and innovation, that they forget the old rules still apply. We learned a lot from this fraud case that could have been prevented.
For startups companies, wrapping their collective heads around the fact that by definition, the company will not always be that is difficult. You can’t stay a startup and be successful, so I say start acting like you’re bigger than you are.
Lumbering behemoths listed on most public exchanges are used to acting compliant, and most have been managing thousands of shareholders for years, some for decades, so they’re both well-versed in keeping them happy, and fairly resistant to bumps along the way. I think optimism is in order – start acting like you’re publicly-traded now, and you’re much more likely to get there.
If you’re looking for funding to help your company thrive, you need to lay it all on the table. If your idea is as great as you think and you stand in front of the crowd, naked, and show them who you are, they’ll give credit where credit’s due.
Get ready to be naked so you can take advantage of Title II or Title III equity crowdfunding. What you need next is a tool to help you with this, and KoreConX provides you a free all-in-one solution to help you navigate the process of been naked for due diligence and shareholder management, communications.
Enjoy being naked! It’s here to last.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer