April showered $44+ Million in Equity Crowdfunding across 97 deals through 22 funding portals.
May the 4th be with you! Yoda's crowdfunding advice for founders, "Buying Equity In Your Favorite Shoe Brand", and meet the first folding electric guitar that just raised $1.5M and has revenue! 🎸🎸🎸
RegCF Crowdfunding commitments for April totaled $44 million+, a 25% drop from March’s record of $49 million. Why? Is there any reason to think the shine is fading? Not a chance.
Wefunder’s own oversubscribed campaign of more than $5 million on Honeycomb was included in March’s numbers for one thing, Republic’s March $28M+ including $5M raises for Gumroad and Backstage Capital, and Start Engine was raising another fund for itself.
Year to date of the BIG 3:
Wefunder - $58,354,056
StartEngine - $39,590,844
Republic - $36,792,753
At Arora Project we had a busy month, partnering with Wefunder to onboard 17 Y Combinator companies, two of them have already surpassed $1M in funds raised. (Airthium and Arc - check them out!)
A standout campaign in our portfolio Ciari Guitars, a company that manufactures the worlds first folding electric guitar, closed in April among others. (more on that later)
May the 4th be with you! Yoda's crowdfunding advice for founders.
Yesterday was May 4th.
You may have seen posts with the hashtag #maythe4thbewithyou, and if you were born in the 90s or later, you may never have heard let alone seen the original Star Wars movie, released in 1977. In the film, as characters make leave of another (only the good guys), they wish each other well by saying “May the force be with you”, the force being some power of good in their world.
Regardless of being a fan of Star Wars or not, one of the strongest mentoring story characters ever created is Yoda, the “Jedi Master.” With this lesson under your belt, here are some of Yoda’s most wisest quotes and what founders can learn from in their equity crowdfunding journey.
“Many of the truths we cling to depend on our point of view”.
Founders often refer to their company as “their baby”, and there is no one more confident and protective of what they are building, often from scratch, than the founder(s). Because of this, it’s understandable that founders can be blinded and unable to look at their company as a potential investment for the crowd to make in.
Getting other people’s point of view, those “outside the box-ers”, is important regardless of raising capital or not. In crowdfunding, it is crucial to be able to position your campaign, its message, your campaign page, the marketing, and most importantly the first 1:30 of your video so that the story being told is not the same narrative that you would tell to customers, but one told to investors. They are two separate ways of telling the same story about your company. And if you are unable to do this on your own, or lack the network to fully support your campaign, then reach out to those that focus on helping companies do just that.
“Your path you must decide”.
Decide in your deck and campaign page what your Go To Market strategy is, how you are going to monetize your product or service, and don’t list more than 2-3 models. One of the things I see with startups are either having none at all or too many ways to make money. Choose the best 1-3 and focus on it.
“You will find only what you bring in”.
Much like institutional funding through venture capitalists, there is a friends and family round that needs to be part of your early steps of equity crowdfunding. The F&F round goes beyond just family and friends. It is your personal and professional network, letting them know your intentions on launching an offering, and asking, yes asking for their commitment. Founders who go into crowdfunding thinking they are going to launch with $0 and raise $1,00,000 is wasting their time and money.
“Difficult to see. Always in motion is the future…”
There is a saying in business. “Always Be Selling”. Many involved in startups cling to “Always Be Raising”. This applies to Equity Crowdfunding as well, however, in a slightly different manner.
There is no way that anyone can determine by looking at a company and hearing their pitch if it will successfully raise capital. However, there are best practices and data that can position a company to have the best chances of success.
A.B.R in ECF is much easier to do as anyone over the age of 18 can invest as little as $100 into your company. It should be on your website, social media accounts, in the signature of your emails etc… A simple, “Be a part of our company as we are raising funds to grow our company and brand!” with a hyperlink to take them to your campaign page. But be careful and be brief as you cannot publicly post any details of the actual offering, that is only allowed on the funding portal your campaign is listed on.
“The greatest teacher, failure is”.
Since 2012 and the enactment of the JOBS Act, over $1 Billion has been raised through regulation crowdfunding. You’d think people have learned a thing or two. So if you are thinking of launching your own ECF campaign, be the wise one here and choose to learn from other people’s mistakes. Seek guidance from those founders who have successfully raised capital this way, and don’t be too proud to seek help from others.
Buying Equity In Your Favorite Shoe Brand
How does footwear fare in the world of equity crowdfunding?
A boot company, Season Three, is raising capital via Republic, allowing lovers of the brand to acquire a piece of the company itself and The Wall Street Journal asks, “if buying $100 worth of equity in your favorite shoe brand is worth it or not”? The company’s cofounder Adam Klein estimates that of the $40k invested, 70% of Season Three’s investors know the founders personally and just want to support their friends.
But the question remains, “How does footwear fare in raising capital through equity crowdfunding?” Well, let’s see for ourselves.
Searching Republic’s site, only two other footwear companies have raised money and Season Three is the only live campaign. Of the two, the most raised was $135,190.
StartEngine has two live footwear campaigns, both closing at the end of May with the most raised between the two being $104,017.
Ironically, although Wefunder currently does not have any live footwear offerings but also two campaigns that have closed. Among them is Ridgemont Outfitters raising the most funds for a footwear brand, just under $200k.
Just because no footwear brand has raised $200k+, doesn’t deem footwear as a losing proposition when turning to the crowd. However, based on the most funded footwear project backed on Kickstarter with $1.26M+, brands might consider reward crowdfunding instead of equity if raising money to manufacture more product is their focus.
That being said, there are other players in the footwear sector that are gearing up for significant raises. Like any company, regardless of the industry or product, the story that is told to potential investors, and how you frame key factors that investors have an appetite for, is one the keys to a successful campaign whether raising $500k or $5M.
Ciari Guitars truly epitomizes what equity crowdfunding is all about: solving problems that many other people have and allowing regular folks to participate and profit from the innovation. You don’t have to be a musician to recognize the cumbersome nature that traveling instrumentalists face. It’s not enough to create a foldable fretboard because the guitar strings are calibrated to a specific pressure range. Mess with that and you’re going to have some potentially dangerous problems.
And that’s the beauty of Ciari Guitars, which was featured on Wefunder and a client of Arora Project. Beyond its fretboard folding mechanism, the platform features a tensioner, which can be adjusted depending on whether you want to play or stow for storage. This immediately solves the guitar transportation issue because your instrument can now fit in a standard airline-approved carry-on bag.
Most importantly, expert musicians have tried the Ciari guitar and it plays remarkably well. Thus, this isn’t a cheap gimmick designed to address the transportation problem. Rather, it’s premium-crafted guitar that happens to be easy to carry. Most importantly, expert musicians have tried the Ciari guitar and it plays remarkably well. Thus, this isn’t a cheap gimmick designed to address the transportation problem. Rather, it’s premium-crafted guitar that happens to be easy to carry.
But don’t take my word for it, these words above are taken from a featured piece on NASDAQ.com back in February.
Ciari Guitars closed it’s campaign on April 30th raising $1.5M+. Congrats to the entire Ciari Guitars Family and all those that invested in their future! 🎉🎉🎉
Up Next: What kind of companies are applying for Equity Crowdfunding?