Crowdfunding on Birchal? Here's 7 essential tips

Crowdfunding is an increasingly popular way for start-ups and scale-ups to achieve funding goals.

In Australia there are a handful of crowdfunding platforms but arguably the leading and best known platform is Birchal.

Founded by Matt Vitale in 2017, Birchal provides a seamless process for raising funds with insight and help for everything from marketing and communications, regulatory and statutory compliance and more. Birchal does all this for roughly 6% of the total funds raised, for successful raises. 

According to Birchal's 2024 annual reports crowdsource funding in Australia rose just 0.77% in FY24, up $500,000 to a total of $64.5 million compared to the previous 12 months. This is despite number of companies successfully raising cash increasing by 16% - (99, up from 82 in FY23).

So what does this mean for the sector? It means in 2024 more companies are raising less money each. With the cost of living crunch and the so called era of 'free money' now over, more Australians - the ones that make up the 'crowd' in 'crowdsource funding' are being more selective with their investments and how much they're willing to invest.

Helping you crowdfund raise successfully

This blog post is an abridged version of a full, free, report, available in our online store now.

We want to help you raise money successfully, and in a tougher crowdfunding environment every moment, every action, every dollar and every advantage you can get, matters!

It is with these thoughts in mind that we put forward this list of 7 essential tips for crowdfunding from someone who has successfully done it and helped advise other companies how to do it.

Rowan Wilde is a founder who has successfully raised funds on Birchal's platform for the company he co-founded, HelpPay. Rowan has also helped a provided advice to a handful of companies looking to raise funds through crowdfunding. Some went on to successfully use Crowdfunding and others chose other funding options. So read on to hear this crowdfunding expert's advice. 

1. Crowdfunding needs a crowd

"The first thing I tell anyone preparing to raise funds with crowdfunding is this: be confident you have a database and network that you believe can get you most, if not all the way, over the line with" - Rowan Wilde 

It might sound obvious, but to be successful in your crowdfunding campaign your company needs a crowd. All crowdfunding platforms in Australia promote their own database they can market your company to. While this is true, it is also true, and crowdfunding platforms will all agree, that nothing beats your own database for a successful crowdfunding campaign.

The fact is, your campaign will more than likely be successful or not based on the volume and quality of the engaged audience you bring to the table.

"there is a phrase you hear a lot of people giving founders - no one cares about your business more than you do. This is absolutely true but it is also fair to say your customers are a close second"

 "The more you can do to warm up your own database, in broad terms, about your growth ambitions, new products, wishlists and other activities to engage them is going to help plant the seeds you'll need later on in the campaign." Mr Wilde says.

Telegraphing the message and beginning to make some noise about your brand growth before officially announcing a crowdfunding campaign could, in this economic environment might just make all the difference to whether your crowdfunding raise is successful, and if so, how much is raised overall.

 

2. Be strategic with your time

When preparing for crowdfunding make sure your diary is clear before and during the campaign period. "there's a lot of hustle involved in crowdfunding" says Mr Wilde, who goes on to say "when you launch your campaign all sorts of people are going to ask you for your time. Be polite and strategic with how you use it."

Mr Wilde explained to us that platforms are amazing guides and facilitators - leverage them, but it isn't just the crowdfunding platform that will want your time.

You will have a prioritised list of potential big investors weeks before launching your crowdfunding campaign. During the campaign there are existing customers who want to become shareholders, new potential shareholders, lots of VC's who suddenly show interest (who often are just gathering market intelligence) and of course, sales people using platforms like Birchal as a potential in to sell their products and services.

In discussing crowdfunding in Australia on platforms like Birchal, Mr Wilde reviewed timelines we presented to him for what founders should expect and plan for and broadly agreed that:

Three months before the campaign launches: Telegraph the message. Talk to your current investors and anyone that has shown interest in investing about your plans, sales growth, why you're raising funds and what you'd do with the money.

Two months before the campaign launches: Strategise about how to warm up your customer database. Do you go out to everyone on your marketing database or do you want to reward your most loyal customers first with advanced awareness of the upcoming campaign?

In the month running up to the campaign launch: Tell as many people as possible in your database, start building awareness and excitement.

While the campaign is running: it's all shoulders to the wheel.

3. What investors are likely to ask

"Investors want confidence about the founders, the market, how the business is going and what their money will be spent on." 

It can be daunting asking for money for your business, particularly if you've never done it before. But asking for money to back your burgeoning business is an essential skill if you want your crowdfunding campaign to succeed. Preparing answers ahead of time for questions investors are likely to ask, is a great way to ensure you aren't caught flat-footed.

Questions investors are likely to ask, and every founder should be able to answer are:

• How big is the market?
• How do you make money today?
• What does sales growth and profitability look like?
• How much are you looking to raise and what percentage of the company does that buy?
• Do you have plans to go overseas / expand further overseas?
• What kind of moat does your business have?
• Who are your competitors and where does the business rank?

 

4. Surround yourself with a great team

How important is a great team to have around you? "it's essential, crowdfunding campaigns are a team sport", Rowan Wilde says.

The fact is crowdfunding requires a lot of skills, which most people don't have all by themselves. The documents required for launching a crowdfunding campaign encompass legal work, accounting and finances, marketing, sales, technology, inventory management, strategy and forecasting and, something many often forget, offer document design.

On this last part Rowan shares a handy tip "if you're planning to do crowdfunding I recommend making an account on Birchal or another platform, and registering your expression of interest for a handful of companies. In addition to finding out more about these companies - and you never know you may find one you want to invest in - you'll see exactly the level of quality needed for offer documents and subscription agreements."

"I don't know any individual who has completed a crowdfunding campaign on a platform like Birchal by themselves. Kickstarter and the like are a bit different.

"Businesses should plan to spend a decent amount of money - about 10% - 15% of what they're hoping to raise - hiring the services needed to launch and run the campaign."

5. Know your numbers and don't 'sell'

Rowan Wilde also offered a valuable nugget of information that we haven't seen shared by other founders in articles online about crowdfunding. The piece of advice is "know your numbers and don't sell - inform".

Investors, particularly those potentially parting with thousands or tens of thousands of dollars are, rightly, sceptical. It might seem obvious but investors aren't gifting money, they've investing to get a return.

Where many founders can go wrong is focusing on their story up to now and not being as concrete about the future. But the future is what investors are investing in, and will be part of enabling.

"I've seen a handful of founders lose the interest of big potential investors by not knowing their numbers, and it's so avoidable" Rowan says.

Mr Wilde also said "founders by their nature are optimistic. We expect founders to be bubbling along, full of energy and positivity. But I would encourage founders to shift their optimism to find the right balance and be optimistic pragmatists. At the end of the day founders need to keep in mind what they're asking for - which is for someone to part with their hard earned, after-tax, money and take a chance on you."

"Another way founders can lose the interest of investors is talking too much, not knowing what or why the investor is interested in their company and 'selling' too much. Founders need to remember that putting on too much gloss can be a big turn off - keeping both feet on the ground, being confident, trustworthy and humble can go a long way."

6. What to do if asked about your exit strategy

"It can be jarring to be asked how you plan to exit a business you're so excited about, but investors want to know when they'll get their pay day." Rowan Wilde says.

Investors are often great, they can provide insight and value from being outside the business that people inside the business sometimes can't see. But ultimately all investor help should be focused on one thing - the return.

Investors want to know, if the business is going to be as successful as a founder hopes it is going to be, how they get rewarded for their investment. Whether it is in the form of dividends, a buy out to a competitor or another party, or ultimately listing on a stock exchange.

Our recommendation is to keep all options on the table, subject to trading conditions. There are many many stories online and in business books about investors that became hooked on just a few years from years or even decades earlier, and whose relationships with founders later soured as a result. 

7.  Check in frequently with your crowdfunding platform

"the crowdfunding platform really is a partner in your success. They are as invested as you are in making your campaign a success", Rowan Wilde.

Crowdfunding platforms in Australia, such as Birchal only get paid upon a successful campaign launch, and it is worth remembering that no crowdfunding platform wants to get a reputation for not being able to raise funds for businesses.

Crowdfunding platforms can be very helpful for achieving successful crowdfunding campaign results for businesses and have robust, well-tested, processes in place.

Crowdfunding platforms, such as Birchal, know exactly what a business needs to do in what order not just to meet the legislative and regulatory obligations of raising money in Australia but also for revving up the business and their database.

Platforms like Birchal will often encourage founders to have a media strategy and 'big investor' strategy in place to, firstly, tell the world about the business and secondly, show to potential investors how popular your business is by getting the crowdfunding campaign off to a great start.

 

In summary

Crowdfunding is a fast paced, detailed, exhilarating and exhausting process that is ultimately rewarding. By working through these steps, and downloading the full crowdfunding tip guide, you are more likely to be more successful in your crowdfunding goals. Rowan Wilde can be contacted via linkedIn.