Raising money for an idea is a challenge few succeed at. At Fund Wisdom our goal is to help both entrepreneurs and investors leverage innovative financial technologies to raise capital and improve returns. We interview founders to uncover tips in the process of raising capital using equity funding portals to help you select which platform to use, build your listing, gain further traction to achieve your funding goals, and avoid any pitfalls in the process. In this piece we focus on regulated non-accredited platforms. I connected to Max Weissberg in his outreach on our site regarding his listing. I go through 7 tips he shared from his journey and offer up some commentary on each.

The Listing

Max Weissberg is listing equity in a film, Karaganda, on StartEngine. The film is about Vladimir, a prisoner in a Soviet prison camp on a mission to rescue his wife, also imprisoned in the Karaganda region. The film has already won several awards and raised a round of funding. It was included in the 2014 AFI DGA showcase and won 5 festival awards. It raised $32,311 on Kickstarter across 127 backers. Their listing on Start Engine has raised $149,600 from 205 investors at the time of this being written. They still have 44 days left in the round, so we expect these numbers to grow. On top of building Luftmensch Films, a New York film and television company Max works full time at Viacom as a Producer and Editor. I respect the hustle. 

1. Selecting a Platform Plan your campaign far in advance

Max

My team and I had never heard of Crowd Equity funding until Startngine reached out and pitched their services. Raising money online? It seemed hard to believe. Like an educated consumer, I researched the platform and others in order to make the best decision. I also spoke with other projects on Startengine. One factor that led us to ultimately to choose Startengine over the others was the fees associated with other platforms. Startengine has no required fees, but charges for rounds of compliance if they exceed three. Wefunder, like Startengine, also has no fees. Republic.co requires $1500 for the Form C compliance and another $1500 for an escrow agent. It turns out Republic didn’t want us anyway because we didn’t have enough of a following. After learning about another project’s problems installing their Facebook pixel on Wefunder, we ultimately went with Startengine.

Brian

An important consideration prior to listing is the type of security you offer whether it be debt or equity which we break out some of the pros and cons of each. We focus on equity but our discussion with Max can apply to either.

Max discusses fees being a driving factor in his selection. We share side by side view of costs associated to entrepreneurs and investors. He also covers a few regulatory requirements from the SEC which we help explain. Each platform has a different vetting process to determine which companies they allow to list their offerings which we detail in each individual listing. We also offer an independent rating of platforms.

As a startup, you need to finance from investors instead of only friends and family. You could conduct a research about the successful campaigns undertaken by others in your field to prepare for you campaign. Most platforms can provide you this information. Also, separate some time to deal with legal pieces and make sure you comply with them.

2. Listing on the Platform - Find the right investing portal

With the growing of online funding, the number of platforms have also been expanding. Find the platform that best suits your company.

Max

As a filmmaker, nothing I’ve encountered in my professional experience has taught me how to fill out financial forms. Thankfully Startengine has transformed the “Form C” (which is filed with the SEC to officially start a project) into a fill-in-the-text boilerplate. As part of our Form C requirements, we had to figure out what the potential risks were, what our company was worth before seeking funding, and what exactly the shareholders were getting when they invested. For a tech company this is easier to explain; for a film, less so. In some cases, we copied language word-for-word from another (approved) film project on Startengine, yet this wasn’t approved by Startengine’s compliance team. The SEC often changes its requirements, so I learned from Startengine, and we were back to figuring this out for ourselves. Somehow we managed.

Crucial, of course, was keeping the costs down. Our expenses were for a CPA to do a required review ($1200) and for the SEC background checks (Total: ~$800). In total, we avoided all of our legal costs as one of our partners is a lawyer. For the most part, as long as one has well-written articles of incorporation for their company, it’s possible to bypass hiring a lawyer in order to launch a project.

Brian

This details some of the hidden costs associated with listing that are difficult to factor in from the outset. Max is lucky to have a team member with legal expertise as that would have added on. We list a few Legal and Tax experts that specialize in equity funding portals.

When an entrepreneur publicly offers equity online the business idea and product is out there for the world to see. Therefore, it is important for entrepreneurs to learn ways to protect their business. First, an entrepreneur should hire a legal team to help draft and understand any documents that come with the investing process. Before posting an equity offering, the startup should consider obtaining a patent or copyright on their idea or product. So that even if the idea is being publicly offered, there is no risk of losing ownership.

Founding teams should also spend time understanding Term Sheets. A Term Sheet is a nonbinding legal document that is presented by the investor and outlines the terms and conditions in which he or she would be willing to fund the company. These legal documents are extensive and confusing and are often overlooked by CEOs. In order to avoid disasters due to misunderstanding the Term Sheet. Some Equity Crowdfunding platforms like Seedrs have began to standardize a template for this legal document. Mark Suster and other well known investors have provided advice on Quora. Therefore, with the help from a legal team, the CEO can better understand the legal agreement for which he or she is signing.

3. Marketing the Offering - Pitch and Story

Max

Within our first day, we had raised nearly $20k. But I quickly learned that finding investors was not easy. Most if not all of the campaigns use some combination of Facebook and Google ads. Startengine even supplied us with useful set of keywords for targeting on Facebook: “Angel Investors, Accredited Investors, Equity Crowdfunding, and Online Investing.” Also crucial was to have video ads with a “disruptor” – something to cause someone to slow down their scrolling to watch our video. In our case, our most successful disruptor was a mafioso pointing a gun directing at the screen. Unfortunately Facebook has not always approved this ad and others, so we are frequently left to their whims whether we can raise money or not.

As it turns out, the SEC has regulations about advertising, namely not to mix financial specifics (115% re-coupment at $100 a share…) with general statements about why the project might be a good investment. At the end of the day, it’s really up to Facebook what gets seen and what doesn’t – for reasons that are seldom consistent.

Brian

Just because you had success with your listing on Kickstarter or have seen some positive initial traction does not guarantee that people will flock to your equity offering. It is helpful to establish a network of potential investors ahead of the listing as Max states Republic and others require this. Online advertisers like search engines (Google Max's example), and social platforms (Facebook and Twitter) offer great ways to target potential investors.

Before you figure out your business plan and present it to the investors, you have to ask yourself what's the exact amount of funds you need and where the revenue will go once it's generated. The best way to attract the investors is to tell a story about yourself and how you've come up with your idea.

Make a list of people you can count on and reach out to first. Notable investors could be very helpful if you can acquire their supports. Go to appropriate events where you can talk about your campaign. Here is also some tips about promotion. Go to the Full Tips for Raising Funds Section 

The journey to success raising money through online portals, or equity crowdfunding campaigns, is accomplished with a solid marketing plan. To ensure your campaign is a success below are a few promotional strategies that are proven to increase your chances of raising funds for your company. 

Use all available online marketing tools

The internet makes it so much easier to market your company. At a minimum, you should have a page for your crowdfunding campaign and a company website. Make sure all the content you upload is well-written, correct and engaging. On your website, you may want to upload articles or run a blog about your company. This can attract more web traffic and give potential investors more helpful information.  If you aren’t comfortable doing this yourself, consider hiring a communications specialist.

You should also use social media platforms like Twitter, LinkedIn, Instagram, and Facebook. Social media gives you one more way to spread the word about your campaign while connecting you with other entrepreneurs. If you see the blog or social media account of someone who might be able to help your business, send them a message or leave a blog comment. This could be the start of a valuable relationship for both of you.

Make your campaign easy and accessible

You only have a few minutes to grab someone’s attention. If the ads for your campaign are too complicated or detailed, people will get bored and move on to another idea. Try to keep your designs simple and express your company’s goals in as few words as possible. In marketing, less is more. Also, make sure that all parts of your campaign clearly tell people where to go for the equity offering. You don’t want to lose investors because they couldn’t figure out how to contribute money.

Grab Attention - Plan & Design

They say a picture is worth a thousand words. This is advice to keep in mind for your crowdfunding campaign. When potential investors see nothing but a wall of text on an ad or website, they’ll feel overwhelmed and won’t want to learn more. A good picture or design grabs attention and delivers information quickly, which leaves a much better impression. This is even more important for your online content. Online market research has shown that:

• Articles with images get 94% more total views
• 60% of consumers are more likely to consider or contact a business when an image shows up in local search results
• In an online store, customers think the quality of a product’s image is more important than product-specific information

Expand beyond the internet

Although the internet should be a big part of crowdfunding campaign, don’t forget about in-person marketing as well. People will be more likely to support your company if they’re able to talk to you in person. Look for local networking and marketing events to build awareness. When you attend an event, come prepared with business cards, key campaign info and a good pitch about your company. If you’re going to give a live presentation, put together a PowerPoint show as well.   

Take advantage of word-of-mouth marketing 

Word-of-mouth marketing is a great way to spread awareness of your company and, best of all, it’s free. Tell all your friends, family members and colleagues about your campaign. Some might be able to invest, but more importantly, they’ll help you get the word out. As you go about your day-to-day business, mention your campaign to people you meet along the way. All this effort will build your audience and your potential group of investors.

Give people an incentive to help

People will be more willing to help your campaign if they have some sort of financial incentive. You may want to consider some sort of reward system where if a person brings in a certain amount contributions, you could give them a bonus like cash or extra shares. Let your suppliers and other business partners know that if your company grows, you’ll give them more business in the future. This way, they’ll be motivated to find you investors as well.

4. The Competition

Max

Generally speaking, few companies are raising money on these platforms. Roughly 60-70 companies are live on Startengine. Currently 49 companies are live on Wefunder, and a few dozen more on the smaller platforms. If you peruse these sites you will inevitably start seeing ads for the campaigns in your Facebook feed. Surprisingly few films have decided to raise money through crowd equity. Based on my own experience, I don’t think many filmmakers know about raising money through crowd equity and are content to use platforms like Kickstarter and Indiegogo that rely on donations instead of investments. There is also the issue with paperwork, which Kickstarter does not require. To distinguish ourselves from the competition, we decided to allow people to see our budgets and script, which few projects, if any, provide.

Personally, I think it’s only a matter of time until celebrities start raising money via portals like Startengine, just as celebrities have used Kickstarter to bring attention to their own projects. Thus, anyone who starts a project now will have an easier time than after word starts to spread.

Brian

Max browsed a few of the top regulated non-accredited platforms. We are building a dashboard to help you gain insight on that data.

5. Keeping the Energy Going

Max

One of the hardest things for any campaign is keeping the energy up when little is happening day-to-day. Taking the advice of David Jay Willis, who successfully raised money on both Wefunder and Startengine for his Christmas movie project, we created a contest on Gleam. The prize is to be a an extra in the film and people must visit our startengine page (or follow our Twitter account) to enter. In addition to this, we are actively seeking coverage on influential blogs and beginning discussions with actors who may be in the film. Updates are essential, but because Startengine now reviews every update for compliance issues, it’s difficult to post regular updates that are delayed several days.

6. Hiring the Right Marketing Vendors

Max

From the very beginning, we were approached by small companies willing to sell us investor lists or do a large email blast on behalf of our projects. Some quick research helped us decide this was not the correct approach. We also briefly hired a Facebook marketing firm that overcharged us and had issues running our ads with the subtitles. After seeing their many mistakes, we decided to fire them. A red flag – which I should have spotted – was the (first) company’s unwillingness to connect us to previous customers. Always do your research. At the moment we are about to hire a new marketing firm to help optimize our ads. 

Brian

Finding the right marketing agency can be a challenge while trying to juggle everything else Max has on his plate. Since advertising an equity offering to non-accredited investors is somewhat new these challenges are not surprising. Have a good firm to share that specializes in this feel free to share in the comments.

7. What is on the Horizon

Max

There’s no doubt that regulation crowd equity funding is here to stay. Startengine claims to have raised more than $100 million and funded more than 275 companies. Wefunder has also crossed the $100 million mark, having funded 312 startups. Despite the benefit the 2016 JOBS act has had on allowing companies like ours to raise money, many issues remain. One investor wanted to invest in our company outside our Startengine offering through a Reg D. But we were forced to reject the investment because he wasn’t an accredited investor, which the law requires, and had already exceeded his allowed investment based on net worth. Despite being a “free” country, our investments are still heavily regulated by the SEC. Thankfully we haven’t spent any money on lawyers to file our Form C and Reg D, but most entrepreneurs will likely not have the patience to sift through the SEC’s unfriendly website.

Brian

Data on the industry is challenging to qualify. I discuss some of the issues in our rating of top platforms as we build the dashboard. I really appreciate Max sharing so much with us. I encourage you to check out his offering: Karaganda, on StartEngine.

Simply having a website or mobile app does not mean that one will reach the whole world with the desired goals of sales, engagement, or information distribution. It can be a daunting task to reach the masses, especially when first building a business or brand. The goal that I set for myself was to build a site that saw hockey stick like growth in traffic on a shoestring budget, employing as many free tactics as I could.

What is SEO

Search Engine Optimization (SEO) is a set of methodologies aimed at improving the visibility of a website in search engine listings. Most information available has a focus on search engine optimization techniques that require payment. The focus of this research is to provide ways to optimize organically, or utilizing methods that do not require spending money. 

Link Acquisition

Acquiring links is the most important piece to optimizing one's site. Spencer (2006) writes, "Linking to a page in effect means voting for it, vouching for it. A web site that has no links pointing to it has no one vouching for it" (p. 15).   Robertson (2006) quotes Cogentis founder, Chris Dimmock, "If content is king, then linking is queen," (p. 5).  Also all links are valued differently.  Sites with higher rank are usually valued more when linking to the site.   Also the type of site is taken into account.  Simon Hayes (2006) writes, "A link from a government or educational site is very valuable" (p. 3).

One way to acquire links is to simply ask.  This can be accomplished by simply writing an email or letter and asking.  Moran and Hunt (2006) suggest initiating a request with an email in order to obtain a link.  Sweeny (2006) suggests offering a link exchange with other sites.  This is where one can approach another Web site and request a link, and in exchange provide a link back. 

Moran & Hunt (2006) recommend several areas to acquire links, "trade magazines, Blogs, research sites, and any related sites E-newsletter can also be a helpful tool to utilize" (p. 376).   Furlong (2006) says, "Publishers are realizing a majority of the site visitors come from e-newsletters" (p. 14).  Sweeny (2006) suggests using mailing lists, direct mail marketing, RSS feeds, and Blogs.  He proposes another way to create repeat visitors by providing games and other entertainment.  Sweeny also suggest affiliate programs as a potential way to acquire traffic (p. 225).  Sweeny also suggests using web Rings which are a promotional grouping of topic specific sites (p. 295).  Each link in the ring is directed to a CGI script on the web rings server that sends the viewer on to the next site in the ring.  Sweeny (2006) writes, "Post on Forums and provide your Web site" (p. 206).  This is a way to capture content focused links for a site. 

Link building tools is another effective method of acquisition.  Moran and Hunt (2006) recommend three of these tools, Zeus, Arelis, and SEOElite.  Zeus is a spider that crawls the web searching for the most relevant sites that match one's Web site criteria.  Arelis is designed to analyze and classify potential sites chosen.  It also helps to solicit mail and stay on top of one's entire link building strategy.  SEOElite has the same management features as the two previous programs, but also offers strong way to score these links.  Overall Moran and Hunt (2006) state that, "These tools can help take some of the disorganization and drudgery out of link campaigns" (p. 383).

Banner ads are an effective way to employ the links themselves.  One can use the banner ad as a visual tool to place on other Web sites to acquire more links.  A great place to list banner ads is on Google AdWords covered in the paid placement section.  The following link:https://adwords.google.com/select/imagesamples.html provides great examples of banner ads and the overall program assists in gaining links. 

The focus of this research is unpaid practice but a discussion of paid link acquisition is necessary as to the importance of the overall practice whether it be paid or not.  Paying someone to acquire links can be effective.  Hayes (2006) states, "'link monkeys,' are computer experts who are paid by SEOs to put in links on other sites by typing comments into guest books or submitting information to online directories" (p. 3).  There is an actual Web site called, http://www.link-monkeys.com/, which claims to be the number one source for link exchanges.

One must watch out not to use devious web practices that search engines do not allow.  Moran & Hunt (2006) write, "Google watches when sites page rank jumps up because it may be because of paying someone other than Google money for good links and can devalue the site" (p. 378).  Hayes (2006) says, "The easiest way to get a link is to rent space on a 'link farm,' a simple web page that contains only links to other sites" (p. 3), while Moran and Hunt, et al. suggest against using link farms.

Stop Wasting Money on Online Advertising

Too many people have a false impression that the best way to acquire incoming traffic to a website is through pay per click campaigns, or other paid advertising strategies. Business owners I speak with are knowledgeable in paid search marketing as they get inundated with promo material, but are often unaware of the benefits of natural search engine optimization.  This is the process of improving the volume and quality of traffic to a web site from search engines organically, or without having to pay. Businesses and organizations need to focus their attention to this. This type of effort often produces much better results. The best part? Anyone can do it for free.

What I believe is the most impactful way to improve ranking is writing and engaging the community you may work within, which will provide inbound links. A quick and easy example of this would be submitting your site to open directory submission listings. This is the process of submitting your organization's information to a directory.  Google's directory is a great place to start.  There is a full list of services at the end of this article.

Social media is another great way to promote a business or organization.  Alyssa Gregory, from Sitepoint, writes about this process of using the medium to connect and promote.

Direct competition search is a very powerful way to gain traffic.  This is a process of searching for organizations that share similarities and then finding who links to them.  After finding an organization one can then do a search for that specific URL in the engine.  This will produce a list of all of the backlinks to the company.  One can then attempt to utilize this list of websites to acquire links on as well.  This could be as easy as leaving a comment on the site through a web form, or directly contacting the site owner or maintainer. 

In conclusion, the above methods work and are free.  They have brought this site over a 300% increase in traffic to this site without a penny being spent on advertising.  A well designed pay per click campaign is probably one of the most cost effective forms of advertising, but links do not persist and all too often businesses implement poorly performing campaigns.  Organizations should focus attention on the concepts stated to provide a lasting increase in traffic and rank.  Lastly, understand that improving rank takes time.  It takes months to see true results.  Check out how you are doing now with this Page Rank tool.

Review Competition

Sweeny suggests reviewing the top 20 results of a desired keyword in order to see what techniques others have used in order to rank amongst these sites.  Sweeny suggests reviewing competitors' sites on search engines to find sites that link to the competition.  Once the links are found web site designers can request links from the same places as the competition. 

Trollinger (2006) refers to keyword ranking and says, "See who ranks number 1 through 3 and write down the top level domain as well the actual address" (p. 45).  He is showing the importance of understanding how the competition got to where it is on search engine results pages (SERP) in order to utilize the same techniques.

Content 

Create search landing pages or pages designed entirely for specific keywords.

Make sure that the Web site is up to date with information.  Changes should be constantly made and content must continuously be added.

'SEO Copywriting' is a technique of writing viewable text on a web page in a way that it reads well for the surfer and targets specific search terms.  The purpose of Search Engine Copywriting is to appear at the top of the search page for targeted search terms.  This also includes the title, description, keywords, headings, and alt tags.  Craven (2006) suggests to have "250 viewable words per page with one or at most two targeted search terms strategically placed within the text and other on-page elements" (What is SEO Copywriting section, para. 4). Sweeny suggests having 250 to 800 words of body text per page (p. 94).  Craven (2006) states that SEO Copywriting is good when, "there are not many search terms to target, and the search terms are on the low to middle end of competitiveness" (Summary section, para. 1).  Spencer (2006) explains, "Each page should have body copy, ideally at least several hundred words of it, that reinforces the keyword themes that are targeted on that page" (p. 16).

Trolling (2006) says, "There's a fine line between dense keywords and getting you banned from search stuffing" (p. 46).  Trollinger suggests using Seochat.com's Keyword Density Tool, and to shoot for a keyword density of 2-3% (p. 46). Burley (2006) says, "Writing for keywords is a waste of time" (p. 23).  Moran & Hunt (2006) suggest that Keyword density is very important (p. 327). 

Measure

In order to ensure success one needs to be able to see if the Search Engine Optimization efforts are actually working.  There are several ways to check effectiveness of SEO.  One can utilize page ranking, web analytics tools, and competitive intelligence tools.

One way to measure effectiveness is to utilize tools that can provide insight to search engine rankings for keywords. Web CEO, and SEO Reporter, provide keyword reports that show positions for each keyword in a large variety of different search engines.  Google and Yahoo Webmaster Tools provide detailed insight on their respective engines, Sweeny suggests www.positionpro.com to analyze a sites position on web searches.  An easy way to see rank is Google's Page Rank. Page Rank can be accessed with the Google toolbar or at http://prchecker.info/. 

Web analytics tools are becoming more complex in providing measurement for SEO. Moran & Hunt emphasize the importance of these tools for optimization purposes. The tools can tell which sites are sending visitors to the site, which search engines are sending visitors to the site, keywords used to reach the site, and the amount of people that access the site. They can also tie the campaigns to key perfromance indicators, like sales figures, lead conversions, or whatever other conversion metrics may be desired.

Competitive intelligence tools like Alexa, Hitwise, and Compete can be used to measure performance against competition.  

Moran & Hunt suggest Link Audit tools to keep track of who and where pages have links (p. 361).

Conclusion

Search Engine Optimization is all about getting high quality links.  Measurement is integral to tell if techniques are employed properly.  It is important to have lots of keyword rich text, but without links this keyword rich content goes nowhere on search engines.