Large Social Networks Power Crowdfunding Success
According to Crowdfund Capital Advisors (CCA), you can’t crowdfund without a crowd and their data shows that “entrepreneurs who have a strong [social media] crowd where they are engaged with them pre, during and post campaign are the ones who raise the most money.”
While this may seem like common sense, many microcap management teams don’t fully leverage the power of social media. In fact, according to NIRI’s 2016 Social Media for Investor Relations Survey, 72% of respondents felt that social media isn’t a primary communications tool for their work due to “lack of interest from the investment community”.
So, who’s right? Well, according to CCA’s data, social media is very important when it comes to successfully raising capital in a crowd funding campaign and crowdfunding and microcap IR share a lot of similarities.
At the time of CCA’s report, entrepreneurs with fewer than 2,500 social followers have raised less than $100,000 in their individual funding efforts, while those with about 10,000 followers have raised between $200,000 and $1 million each.
Sherwood Neiss, a principal at Crowdfund Capital Advisors, in an interview with VentureBeatsaid “Entrepreneurs have always raised money from people they know, usually based on pre-existing relationships.”
VentureBeat points out that “Social networks like Facebook and Twitter have expanded the pool of potential investors beyond geography to communities of interest, shared national origins, and so on, in ways that previously were not possible. Still, Neiss estimates that 90 percent of entrepreneurs who’ve received crowdfunded investment had a pre-existing relationship with their investors.”
For more, check out the VentureBeat article HERE.