Earlier, Causeartist reported on DoneGood – an online shopping platform to help customers to discover social impact companies while shopping online. They ended up more than doubling their initial funding target of US$300,000 – raising over US$722,000 on SeedInvest.
But Causeartist aren’t the only ones. Equity crowdfunding allows companies to raise capital from the crowd by offering them the ability to become micro-shareholders. It’s different to Kickstarter, and makes it open to many other business models. Happily, equity crowdfunding tends to work best of all for ethical brands, thanks to the trend of investors increasingly wanting to use their money to make the world a better place.
This article presents two more inspiring case studies of the types of companies which have had incredible success with this new innovation in early-stage financing.
Juha Suojanen heads EkoRent, which provides shared and hourly electric vehicles for hire. They raised €171,000 on the Finnish-based platform Invesdor. Explaining why they decided to use equity crowdfunding, Suojanen said:
“Our alternatives were banks, angels and venture capital. We decided on equity crowdfunding because since we are in the business of electric vehicles, we had a good hunch the public would be enthusiastic about our mission. As well as the money, we expected to get some free media time in TV, newspaper and radio, and tie our existing users closer to us. And that’s exactly what happened. We have been really pleased with how it turned out.”
And, equity crowdfunding has been great for promoting EkoRent too. “Because we are in the business of electric vehicles, I believe social media was more effective for us. We offer an ecological alternative, and people are more willing to share a company which does that. People don’t boast about the stocks they have invested in as a general rule, unless it is a company that they really love”, says Suojanen.
Alicja Domelid runs Naturalbox, which delivers organic snacks, health, and beauty products. Her decision to use equity crowdfunding was motivated by a desire to maintain closer control over her company culture – which, not being profit-first, doesn’t tend to sit too well with most members of the traditional financing world. Natualbox raised over €212,160 on Swedish equity crowdfunding platform FundedByMe. Domelid explains her frustrations with the old system as follows:
“No banker would share the passion I have for my business. And most venture capitalists are pretty arrogant, greedy and difficult to work with, from what I know.”
Since finishing her equity crowdfunding campaign, Naturalbox has gone from strength to strength, and Domelid is very enthusiastic about the potential of equity crowdfunding’s for ethical companies: “It really is possible! Ordinary people are actually interested in becoming investors in startups, and they actually will engage. I would strongly recommend startups to seek crowdfunding and to invite the crowd to become engaged investors. Now everyone has the chance to become a seed investor!”
How To Start Crowdfunding
Inspired by these stories of success, Causeartist readers may now be wondering how to crowdfund for themselves. Clearly, these equity crowdfunding case studies didn’t just happen overnight. The work all starts with building community, which is about growing your crowd, well in advance of crowdfunding. And, just as importantly, deepening the relationship you have with them, such that it becomes very natural for them to invest in you. To do this, all your interactions with your crowd should be a welcome presence in their lives. Luckily, this is easier than usual for social impact companies, given that their audience already tends to feel a deeper-than-normal sense of connection.
Then, leveraging your crowd’s sense of ownership, into real ownership, will be aided by bringing them along for the ride as you build your campaign towards launching. At every opportunity, you should show them your determination to change the world for the better, and asking them to help you to do it. Ask them to help you decide on which video to use, or ask them to share your news on social media. For those willing to put in the work, the doors are wide open for ethical causes to access the equity crowdfunding revolution.
Nathan Rose is the bestselling author of Equity Crowdfunding. He has appeared at crowdfunding events all over the world. Today, he runs the website www.startupfundingsecrets.io, to help startups and growing companies use equity crowdfunding to gain marketing exposure and raise investment money at the same time.