Glossary
Equity crowdfunding
Definition of equity crowdfunding, the Regulation CF and Regulation A+ offerings it runs on, and why marketing decides how much a raise brings in.
Equity crowdfunding is raising capital by selling shares (or other securities) to the public online, typically through a registered funding portal or broker-dealer, so that ordinary investors can buy in alongside accredited ones. In the United States it runs on two exemptions: Regulation Crowdfunding (Reg CF), which lets a company raise up to $5 million in a twelve-month period, and Regulation A+, which allows up to $75 million with more disclosure and a qualified offering circular.
Unlike a venture round, an equity crowdfunding raise is a public campaign. The offering page is a landing page, the investor is a customer who has to be found, convinced, and reminded, and the total raised is a function of the marketing behind it: audience, message, paid and owned channels, and the funnel that turns interest into a completed investment. See digital-marketing-strategy for the decisions that come before the campaign, and product-crowdfunding for the rewards-based campaigns that are often the step before an equity raise.
The shape of a raise
Money arrives at the open and at the close, with a long middle in between, so a raise is usually planned in four parts:
- Before the offering opens. An audience is built through testing-the-waters communications, the story is settled, and tracking is verified. This period decides how the first week goes.
- The open. The warm list converts first, and its early investments are what every later visitor sees on the offering page. Where that list came from is the subject of investor-acquisition.
- The middle. Paid channels are tested and budget follows the evidence.
- The close. A real deadline, run as its own campaign.
Measuring it
The metric a raise is run on is cost per completed investment (see investor-acquisition), not cost per click or cost per lead. The drop-off between a started investment and a completed one, which happens on the portal's own domain, is where most raises quietly lose money, so it is tracked separately from the traffic that produced it.