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3 supreme tactics to dramatically reduce the cost of an equity crowdfunding campaign - YouTube
Channel: Stobox
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crowdfunding is supposed to be a way to
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raise early stage capital forget your
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business going on early stages
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however it turns out to be quite an
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expensive endeavor
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due to an increasing competition of
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crowdfunding platform and campaigns
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the cost of a full-scale crowdfunding
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campaign
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can reach hundreds of thousands of
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dollars
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in this video i'll tell you about three
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tactics
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that you can use to reduce the cost of a
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crowdfunding campaign
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in the end of this video i'll announce a
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bonus information
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book that contains specific practical
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steps for conducting crowdfunding
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using innovative technologies if you're
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not sure
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whether to pursue crowdfunding and are
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interested in how crowdfunding
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can be used for startups real estate and
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private equity
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we have videos on each of these matters
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so make sure to subscribe to our channel
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and check out these videos my friends
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welcome at stopbox insights a video
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series about innovative methods of
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raising capital
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business growth law and finance brought
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to you by professional consulting
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company we have more videos on different
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ways to raise capital
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ipo direct listing private placement
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security token offering
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subscribe to find out more on innovative
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ways to find investors and fuel your
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growth
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let's go
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[Music]
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the tactic number one is to raise the
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development capital
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the biggest component of the cost of
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crowdfunding
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is marketing on average you spend from
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two to ten percent of the expected
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proceeds on marketing
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for example if you are going to raise
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three million
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you need to spend from 60 to 300
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thousand dollars
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on the marketing alone which is quite a
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significant
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upfront investment the beauty of the
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crowdfunding campaign
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is that you actually don't need all that
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money upfront
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you only need some initial upfront
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capital
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and then you can cover the cost of
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marketing from the ongoing proceeds
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for example you can invest initially 15k
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to raise 150k and then spend
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those 150k to raise one and a half
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million
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in such a case your goal is to generate
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from the business
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or raise from friends and family the
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initial
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development capital that is the money
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you need to put into tech
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legal and marketing to start the
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crowdfunding campaign
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this practice is especially common among
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private equity funds
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because they are so heavily regulated
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they have a huge
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burn rate that can reach millions of
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dollars per year on legal compliance
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and they need to pay all these expenses
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even before they raise
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any money and get some fees they can use
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for operations
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this is why before setting up the fund
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they raise several million dollars in
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the development capital
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to support the fund while they are
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raising money for the main fund
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which can be already hundreds of
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millions of dollars
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you may ask whether your initial
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investors will like the fact that you
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are going to spend their money
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not on developing your business but to
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raise more capital
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there are two reasons why this is
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actually fine
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which you can use in the communication
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with your investors one
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is that marketing of your crowdfunding
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campaign
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is also marketing of your brand and your
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product
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so this is money spent to the right use
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secondly it is actually common practice
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to include the cost of a crowdfunding
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campaign in the list of expenses in your
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financial
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plan if you still deliver satisfactory
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profits
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your investors should benefit from it
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still
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this is true that early investors take
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upon themselves
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higher risk and should be rewarded
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accordingly
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this is where the next strategy comes
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into play
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early bird discount means that you can
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sell
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shares at discounted prices to early
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investors
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the discounts may be more than 50
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percent
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depending on how early investors come
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and how strongly you need money
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these discounts are a very powerful way
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to get early investors on board
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because it provides them with a nearly
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instant profit
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if today i purchase your shares for 50
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cents
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and in a few weeks someone get them for
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75 cents i made 50 profits in a few
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weeks
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which is a super exciting deal if you
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combine it
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with the right to be the first to exit
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the investment
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the deal becomes even more lucrative you
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need early investors not only to get the
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capital to fuel your marketing campaign
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but also to create a social proof
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people are social creatures we prepare
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following the crowd to think in our own
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mind
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this means that getting first investors
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is harder
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because it seems like the crowd is not
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putting money
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in you to overcome these social factors
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you need to turn on the grid by offering
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great discounts
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after you get early investors social
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factors start working for you
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and things become easier the strategy
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number three
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is to recognize your shares one of the
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biggest factors holding people back from
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investing in crowdfunding
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is the risk of never getting the returns
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this risk is caused
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not only by your potential failure but
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also by the fact
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that return on investment in private
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companies
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is not as easy to get because it is
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impossible to sell your shares
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unless you do an ipo this is where
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tokenization comes
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in this is a powerful innovative
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technology
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that allows to make your shares tradable
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at early stages
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long before you go to the initial public
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offering
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tokenization transforms your shares in
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the form of
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blockchain tokens which then can be
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traded on specialized marketplaces for
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tokens backed by securities
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this deals with the principal problem
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people have with
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investing and allows you to stand out
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from the
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crowd of other crowdfunding campaigns
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pun intended now it's time for the bonus
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i promised
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in order to receive it you have to go to
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our website
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stopbox.org scroll down and download our
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book
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it contains a specific step-by-step
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breakdown of the process of crowdfunding
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using tokenized securities
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also one person who subscribes to the
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channel
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likes this video and leaves the most
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thoughtful comment
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and will receive a physical copy of the
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book with the signature of an author
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on this channel we explore tokenized
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shares
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their legal and marketing aspects a lot
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so please
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subscribe to the channel to learn more
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about security tokens
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and how you can use this technology to
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power up your crowdfunding campaign
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stay tuned and see you in the next
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episode
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