If you are considering capital raising for your business, one of the keys to a successful equity capital raising is "social proof". Here Paul Niederer, Managing Director of the Australian Small Scale Offerings Board (ASSOB) talks about social proof and ASSOB.
"The evolution of an ASSOB equity capital raising is highly dependant upon "social proof". Social proof is proof that other investors have become "followers" of the entrepreneur and are supporting them in their endeavour. This proof is shown on the ASSOB Capital Raising Platform as "red squares". If an investor is seeking to invest in a company currently raising capital one of the best indicators of progress is capital raised to date," says Paul.
When you consider investors, it serves a company to build a list of first "followers" of the company. These are often people who have observed the team over their professional lives, distributors or suppliers of the company – who want to "buy in". Or it may be networks of the team.
If first investors are not found from the networks that can effectively endorse the business, it is in Paul Niederer's words "not fair to expect people totally unfamiliar with the business to invest private equity capital. For this reason ASSOB seldom allows a company that has not secured investment from networks of the business to open live on the ASSOB Equity Capital Raising Platform. If this is the case the company needs to go back to the drawing board and evaluate why their offering is not attractive and what needs to be done to attempt to get the offer on a course where it is attractive to friends, followers and fans of the business. ASSOB & Alchemy can facilitate a three hour "Discovery Meeting" to assist in achieving this".
As one of the lead sponsoring members of ASSOB, Alchemy manages the offer through a VIP process to the networks of the company. We structure the offer into 2 or 3 rounds with escalating prices and work the first round tightly with the founding team. We then open the offer up to a broader network through a well structured and proven campaign methodology.
Other features that make the marketing of a capital raising offer effective include:
- The ability to create impending events such as a listing date,
- Ability to offer a discount to networks of the issuers prior to a listing,
- prospectus-quality offer documents,
- validation achieved by having an external sponsor (corporate advisor) that is approachable & responsive to investors,
- social proof and transparency provided by the ASSOB listing of the offer,
- collaterals including a company video on the issuer page and regular communication with current and potential investors
- Our communications cover the 18,000 subscribers on the ASSOB platform receiving monthly issuer updates and over 1000 on the Alchemy investor list, including a further 4000 via our database.
One of our favourite exemples to demonstrate the power of social proof and the way to create momentum, is reflected in the video on YouTube – Leadership Lessons From the Dancing Guy. Enjoy!
Kate Ingham is a Partner with Alchemy Equities, a corporate advisory firm which specializes in equity capital raising for high growth businesses. For more information on private equity capital please visit: http://alchemyequities.com.au/
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