3 Reasons Why Equity Crowdfunding is Good for Business (with Real Company Examples)

Here are the three reasons why a successful equity crowdfunding campaign is good for business. It:

  1. Boosts brand awareness
  2. Boosts sales
  3. Forces a full review of business operations

In this article, we’ll delve into each of the above-reasons why equity crowdfunding is good for business, providing examples from real companies which have equity crowdfunded.

1) Equity Crowdfunding Boosts Brand Awareness

When you run an equity crowdfunding campaign, you’re appealing directly to your existing crowd of supporters, from customers to friends and family. Instead of the usual buyer/seller interaction, you’re offering them the more intimate opportunity of becoming a shareholder. You’re inviting them to help your company grow through their investment and the chance to possibly receive dividends one day; Thank You Payroll recently became the first equity crowdfunded company to pay dividends since equity crowdfunding was legalised in New Zealand in 2014.

Equity crowdfunding campaigns must engage viewers to succeed, naturally leading to a boost in brand awareness. This is evident in social media statistics, media coverage, mentions, and site traffic.

A screenshot from a Medical Kiwi social media dashboard during their equity crowdfunding campaign.

Medical Kiwi, which launched their $2 million equity crowdfunding campaign in August, 2020, saw a significant boost to their brand awareness and engagement after the launch. According to their social media data, they reached 167% more users, engaged 244% more users and increased their followers by 452%. 

A Container Door customer becomes a shareholder during their 2019 equity crowdfunding campaign.

Equity Crowdfunding Creates Great PR Opportunities

An equity crowdfunding campaign involves a lot of people (campaigners, potential investors, stakeholders, etc), has clearly defined timelines and legal boundaries, and is considered interesting by many readers. These factors combined make it newsworthy. You can attract media through press releases about your intention to equity crowdfund, unusual events during the campaign, or when major milestones are hit, such as equity crowdfunding minimum goals.

5 Examples of Equity Crowdfunding Campaigners Who Attracted Media Attention

  • Downlights had a difficult equity campaign, as it launched the morning that Jacinda Adern announced New Zealand was going into Level 4 Lockdown. They made use of this unusual and unfortunate situation to get media coverage and spread awareness about their equity crowdfunding campaign.
  • Puro’s record-breaking equity crowdfunding campaign earned them coverage in some of New Zealand’s most well-known publications, such as Stuff.

Many of Your Customers May Become Brand Ambassadors through Equity Crowdfunding

During an equity crowdfunding campaign, customers who know you are getting to know you even better. Suddenly they’re not only aware of the product or service you provide them, but they get to know your company intimately through your financials, forecasts, values, team, etc. This makes them love you even more and want to help you grow. If they invest, then they suddenly have a stake in your success and will advocate for it all the more.

A message left by a Downlights pledger during their 2020 equity campaign.

Opportunities to Boost Brand Awareness doesn’t End with the Campaign

Equity crowdfunding can continue to give your brand exposure long after the campaign too. If you’ve run a successful equity crowdfunding campaign, you have something valuable to share with a lot of people who are interested in it. You could participate in webinars, events, or share your crowdfunding story in other ways. 

At PledgeMe, we are constantly sharing the wins of PledgeMe alumni (previous campaigners) across our blogs, newsletters, and social media (using the hashtag ‘#pledgemealumni’). We do this because showing past campaigner’s successes demonstrates why crowds coming together to support good companies is so important.

2) Equity Crowdfunding Boosts Sales

Boosted brand awareness and spikes in sales go hand-in-hand. We’ve found this to be true in equity crowdfunding campaigns too, even if the newly converted customers haven’t pledged to the campaign (or intend to). You’re getting your brand out there more, making consumers more aware of your impact, and actively engaging them at a higher level.

3 Examples Where Equity Crowdfunding Coincided with Sales Spikes

Even though Downlights ran their equity crowdfunding campaign at the start of the pandemic-caused economic downturn, their online sales for April 2020 were 92% higher than projected, with one week experiencing a 1000% increase in sales (no, that’s not a typo!). Their online projected sales for May were also surpassed 3-fold just halfway through the month.

GPSOS also had a difficult equity crowdfunding campaign, given the mid-pandemic economic climate at the time. However, they experienced some of the best sales they’d ever had. They experienced 100% growth in just six weeks during their equity campaign. In fact, they were growing so quickly that they were worried they were going to run out of medical alarm pendants! 

A quote from an update on GPSOS’ equity crowdfunding campaign page.

Little Yellow Bird also saw a spike in sales during their equity crowdfunding campaign. They stated in one of their campaign updates that they’d had “one of our best sales months” and had processed “more inquiries and sent out more quotes and proposals than ever before”.

Little Yellow Bird Founder, Samantha Jones, with world-renowned environmentalist Jane Goodall during their 2019 equity crowdfunding campaign, which saw one of their best sales months ever.

3) Equity Crowdfunding Forces a Full Review of Your Business

The legal, marketing and operational requirements needed for an equity crowdfunding campaign forces a full review of the company. By digging deep into the financials required for the Information Memorandum (in New Zealand) or the Offer Document (in Australia), you’ll be able to see where you’re losing money or could be making more. By looking into the best ways to communicate with your crowd, you’ll get to know your audience more intimately and apply your learnings for future marketing. As you allocate campaign-related tasks to your team, you’ll discover previously-unknown team member talents and where your team has gaps. As one CrowdfundingU reviewer stated:

Is Your Business Ready for Equity Crowdfunding?

While a successful equity crowdfunding campaign is good for business for all of the reasons above, it’s not something you should just plunge into. A successful equity crowdfunding campaign takes time and careful preparation. Here are some useful resources if you’re considering an equity crowdfunding campaign:

If you believe your company is ready to raise funds and welcome new shareholders through an equity crowdfunding campaign, enroll in our equity crowdfunding education program, or talk to one of our team members.

Note: All figures, pledger quotes, statistics, claims, and equity campaign figures have been provided by campaigners and/or are publicly available on our website.

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