When you’re raising money for your startup through equity crowdfunding, it’s important to consider all possible strategies to help reach your campaign goal. One potentially high-impact strategy is offering investorperks. In this week’s edition of the Arora Blog, we’ll be discussing different types of perks you can offer and how to leverage them into the maximum amount of investments.
In 2019, an Indiegogo study found that campaigns offering perks to their investors raise 143% more money than campaigns that don’t. And while Indiegogo is a rewards-based platform where equity crowdfunding rules and regulations don’t necessarily apply, we find this statistic holds true for equity-based campaigns as well. People love their perks!
But before we get into the nitty gritty of helping you strategize your campaign perks, it’s important to discuss the five tenets that make a campaign perk worthwhile.
Ideally, your perks are directly related to your company’s mission, ethos, or work, such as a free or discounted product or a mention on the final product. Whichever perks you pick, make sure your donors are able to see the link between what you’re offering them and the work that you’re asking them to support—or at least the link between your company and the perk.
When offering perks on your campaign, it’s important to keep them cost effective. This includes the cost of creation, production, and delivery—don’t forget those shipping costs!
Keep in mind if your perks cost more than the value of the investment, that would make the investment into a purchase. This is not legal on an equity crowdfunding campaign page as your investment perks would then count towards your revenue.
You’ll want to choose high-quality perks that actually entice investors. Try and get into the mind of your ideal investor and consider what they might actually want—then find a way to give it to them.
Don’t be afraid to flex your creativity when it comes to campaign perks, especially if you’re trying to keep your perks as inexpensive as possible. What can you offer as a token of gratitude that’s unique to you, your product or service, and is within your skills to execute?
It’s imperative to make sure that you and your team can actually deliver on your perks. There’s almost nothing that can make an investor lose trust in your company faster than overpromising and under delivering. By delivering on your promise, you demonstrate accountability to them as a community and as part of your team (because they are!).
Popular Kinds of Perks
With enough creativity and commitment to follow-through, your options for campaign perks are virtually limitless (other than limits potentially set by your chosen broker-dealer).
That being said, here are a few of the most common to point you in the right direction:
- Bonus Shares
One of the most straightforward types of perks you can offer on an equity crowdfunding campaign is bonus shares. Savvy investors want the biggest bang for their buck, and what’s a better value than extra shares at no extra charge?
- Investment Size-Based Bonuses
Incentivize your investors to invest larger amounts by offering more bonus shares once they reach a contribution threshold. You can also create investing tiers. If you offer 5% bonus shares for investments of $100, you could then incentivize larger investments by increasing the bonus to 7% for $500, and 10% for $1,000. This could be all an investor needs to make a larger investment.
- Time-Based Perks
At the beginning of your campaign, you can try offering early-bird perks (including bonus shares!) for investors who are among the first to join your investor pool. Those early investors then serve the double purpose of providing social proof to help other investors decide to invest.
Your campaign will likely experience a plateau, and perks can be a great way to secure investments during a slump. When you begin to notice your investments stop coming in as consistently, a way to attract investors is to offer exclusive perks for same-day or next-day investments.
- Swag or Company Merch
Many investors are financially minded and prefer bonus shares, but there are also investors with a consumer mindset (it’s not called retail investing for nothing). You might be surprised what some of your investors would do for a t-shirt, hoodie, water bottle, backpack, pens, sticky notes, or any number of other company-branded merchandise you can offer!
Even if your swag isn’t the detail that convinces them to invest, merch can be an extremely cost-effective way to cement an investment. And as an added bonus? Branded merchandise in public increases exposure.
Keep in mind that if your business doesn’t have a consumer-facing product, you can still create campaign-specific merchandise. This could be something simple like a t-shirt that says, “I Invested in [Company Name]!” and includes a link or QR code to your campaign or your website.
- Product Discounts
If your offering is for a product rather than a service, a great perk for your investors is a special investors-only discount code for your product. You could also offer a certain percentage discount based on the size of the investment to potentially attract higher dollar amounts.
Making a tangible product more affordable for your investors is a great way to turn them into devoted brand advocates.
- Unique Experiences
Perks can be as creative or interesting as you want them to be, but beware: experiences are higher effort and higher risk. Giving your investors a less-than-ideal experience is worse than giving them nothing.
But as with anything in the equity crowdfunding world, higher risk can equal higher reward. Experiential perks will give you a chance to offer investors something memorable they can’t get anywhere else and create massive value if your unique experience is particularly covetous.
Say you’re a brewery owner using crowdfunding to expand your operations or open new production facilities. A unique experiential perk for your most valuable donors could be an investors-only tour of your brewery. .
- Consultations or Strategy Sessions
Don’t forget that your time and industry expertise are valuable, and there are investors who will relish the opportunity to pick your brain. A 30-minute strategy session or consultation with investors is a cost-effective way to bring value to your perk options while further cementing the importance of your offering.
- An Invitation to a Wrap or Afterparty
This option is fairly niche and might not have wide appeal, especially for startups that don’t intend to host a celebration at the end of their successful campaign or upon the launch of their product/service. However, for companies who do plan to celebrate, inviting your investors to mingle with your team is a fun and creative enticement.
- Personalized Thank-Yous
Even something simple like a sincere thank you card (signed by your whole team), a social media shoutout, or a handwritten note from your executives can be a good perk, depending on your audience. These are more personal and more meaningful than a hastily designed and poorly produced piece of swag (although, as noted above, there are investors who love merch as well).
Ready to Partner With Campaign Strategy Experts?
You might be a little further on your journey before you even start deciding which perks to offer investors, as equity crowdfunding campaigns take an extraordinary amount of time to strategize, launch, and optimize.
If you’re a founder ready to start that journey and would like to partner with industry experts to help you smash your raise goal, we’d love to hear from you.