When it comes to private equity investments, whether it is via an existing financial services player or an investor or equity crowdfunding platform there are two distinct ways of gaining investors.
- Serendipity. This is the build the offering and they will come approach. You prepare your pitch decks and Information Memorandum or offering document and you send it out to everyone you think maybe interested and then sit back and wait for the ones that are interested to contact you. The same can be said of embarking on a continual stream of pitches to all and sundry, including known private equity investors, on the hope that someone will grab your opportunity while browsing or considering several other private equity investment offers. The approach investors will use in finding your offering is serendipity. Serendipity is defined as the act of finding something valuable or delightful when you are not looking for it. Relying on serendipity has a lot lower success rate than a full 9 step – Investor Aggregation System but you may get lucky!
- Investor Aggregation. This is a process that starts long before the offering materials are prepared. Investor Aggregation is the gathering of private equity investment for an entity seeking capital. While every entity doing this may have different processes there are nine generally accepted steps from beginning to end. The end being investors who are now your shareholders with share certificates and regular updates.
Lets look at Investor Aggregation a bit more closely.
- Pre-Launch there are 5 steps. The pre-launch can start months in advance but normally it lasts for three to five weeks. In the beginning you can give people a hint that “something new and exciting” is about to happen in your world and that you will be keeping them posted as you hope they can assist. This builds background anticipation. Interactions may also help you define the products and the hook which is an important part of the pitch. Creating buzz is what it is all about in the pre-launch stage and as you move towards launch you can answer any objections people have and improve your story and team to match. During this time you need to build a good list on Mail Chimp or whatever list system you use. The steps are Plan, Prepare, Recruit, Attract and Enthuse.
- Launch there are 3 steps. The launch is when people can actually start contributing money. Up until now you have only been able to get commitments and indications of support. Social proof plays an important part here. People need to see that others are contributing. The length of the campaign also provides scarcity. People know if they wait they may miss out on a share price while investors are being aggregated. The Steps are Promote, Engage and Accept
- Post Launch there is 1 step. Normally this is as long as it takes to deliver on your promises. With equity raises you need to deliver the share certificate and use the money as you said you would and deliver value for the shareholders. Private equity investment may be needed again so you have to keep investors updated and happy. The last step is Deliver.
If you have a raise or a platform that you would like to be guided through or handled for you on an investor aggregation platform or equity crowdfunding platform please fill out your contact details on the right.
