Why making capital raising a business asset

The least efficient way to do crowdfunding capital raising is to consider it an extraordinary, tedious but necessary operation. The most efficient one is to make capital raising a business asset.

Businesses are used to considering capital raising as an extra activity to be carried out at certain stages of a company's life to ensure its survival and growth. When it comes to raising capital through alternative finance instruments such as crowdfunding, the operation is considered even more extraordinary and occasional.

Truly embracing the alternative finance revolution and seizing all its opportunities, on the other hand, means making capital raising systematic, as if it were a new line of business or a corporate function. Just as there is at least one person on your team for each function, when not an entire office dedicated to it, it must be the same for capital raising: you must have a permanent person or department that deals specifically with capital raising.

The benefits of raising capital as an asset

The benefits of making crowdfunding capital raising systematic can be divided into two fields of effectiveness: financial and business.

From a financial perspective, crowdfunding has four obvious main advantages for a company:

1. possibility of avoid debt, thus reducing the risk of default or insolvency compared to bank or other traditional financing.
2. Ability to retain control over one's own business, avoiding the need to cede governance to third parties, as is the case, for example, with investment funds or business angels.
3. Tax incentives for investors who can take their investment as a deduction if made in innovative companies.
4. Ability to reinvest the capital raised immediately, thereby creating a flywheel to increase the value of the company.

While the financial benefits may seem immediately intuitive, the more generically business benefits are less obvious and more widespread:

1. make a great and innovative marketing campaign.
2. Engaging customers with a different angle of attack than usual (different proposal, leverage and communication).
3. Little or no competition because it is difficult for a competitor to be crowdfunding at the same time.
4. Transformation of the business model by adding new products, whether yields in the case of lending crowdfunding or corporate shares in the case of equity crowdfunding.
5. Improved delivery process of complex offerings (e.g., consulting or ad hoc projects), which become more immediate as a result of the investment;
6. Improving customers' Loan To Value (LTV) by lowering the risk of the investment.
7. Increased commitment of customers who also become investors.

All these benefits lead to solid and continued growth over time of the company if they are continually fueled by crowdfunding capital raising as asset, not least because a virtuous circle is established in which the effects of the raising activities result in increased attractiveness to new funders and the game begins again.

With a single successful crowdfunding campaign surely these results are still achieved, but on a smaller scale and with a large waste of margin.

How to make capital raising a business asset

There is no one way to do it: the beauty of crowdfunding is that it offers so many possible tools that can be combined in different ways to support business growth and then monetize that growth. We call them the 8 pillars of capital raising and they are equity crowdfunding, Participatory Financial Instruments, lending crowdfunding, reward crowdfunding, real estate crowdfunding, Crowdfunding listing, Initial Decentralized Exchange Offering and Security Token Offering.

Some examples that come from the experience of our clients:

• Alpha Mobility as a result of massive marketing activities combined equity crowdfunding and reward crowdfunding to propose unique offers (rewards) related to its product (electric columns) to new customers and the reached target of stakeholders, find more customers, and simultaneously monetize its growth by selling company shares;
• Cam TV launched one of the first Security Token offerings in history, based on remunerating investors through the revenues generated by the platform, with the goal of monetizing the platform's users; the operation was flanked by the engagement of new users through the sale of a book and then a series of other products at an increasing price to finally arrive at the token proposal;
• Cesynt Advanced Solutions conducted an equity crowdfunding campaign to raise capital to support its growth, and then leveraged a second equity campaign to carry out a Crowdlisting® transaction and list itself on the stock exchange, accessing the opportunity to raise capital from third parties on an ongoing basis;
• Forever Bambù has applied the concept of systematic capital raising to the letter by successfully completing 17 equity crowdfunding campaigns in a few years and also activating a lending crowdfunding campaign to remonetize new members and engage other users.

An iconic and world-renowned case study, however, is that of BrewDog, a Scottish craft brewery founded in 2007, which has made crowdfunding its business model since 2008. Short of money not only to grow but also to survive, the founders launched Equity for Punks, with the idea of involving their most loyal customers in the project and doing "equity crowdfunding before equity crowdfunding even existed." With just that first campaign and an effective investor reward system, they raised more than half a million pounds.

Through successive equity crowdfunding campaigns, BrewDog over the years has created a community of more than 130,000 investors worldwide who form the foundation of the brand.

The BrewDog case is the borderline example of how to make capital raising an asset by having a financial structure built specifically for doing crowdfunding and supported by marketing and sales processes not extraordinary, but tested and fully integrated into normal business processes, to the point of becoming automatic. This allows for a machine that is always ready to be activated to fuel a cycle of business growth and monetization of the value generated by that growth.

Turbo Crowd si è specializzata nell’ottimizzazione dei processi marketing e sales delle società nell’ottica di integrare la raccolta di capitali in crowdfunding nella struttura aziendale per costruire un percorso di crescita più efficiente.

Do you need support in preparing a successful crowdfunding campaign and seeking potential investors for your project?

Turbo Crowd can accompany you throughout the process, from organizing the precrowd to closing the collection, developing effective and innovative marketing strategies to best promote your campaign.

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