Build A Following First

Lewis advises brands considering crowdfunding that they shouldn’t do it unless they have a customer base with at least 10,000 customers. Another 10,000 followers and/or email and text subscribers are crucial, too. Lewis estimates half the money CurlMix has raised via crowdfunding is from social media followers, and the other half is from email and SMS subscribers. To assist her in building a following, Lewis started a podcast titled “More Rounds with Kim Lewis” in 2023 and went from 2,000 followers on her personal Instagram account in April to nearly 16,000 today.

Being forward-facing helps founders connect with followers, a.k.a., potential investors. “You really want to be a personality,” says Lewis. “It’s almost like raising money for your political campaign. As soon as you put a face to it that people believe in and they trust, now they’re ready to give you a dollar or $50 or $100.” Ha co-signs on the importance of getting personal. She says, “You have to talk about your journey, whether it’s positive or negative, and really share why you’re doing it so that people can really get behind you.”

Arshad, who started as a makeup artist, has amassed a social media following of 32,000 and appears in social media posts for her brand. She turned to her following for Samreens Vanity’s Wefunder campaign in August, which accumulated over $77,000. Arshad says, “Focus on building a community because, then when you go out to raise capital, you may not completely crush your goals, but the support really keeps your hopes up because it’s a hard process.”

Invest In Financial Preparation

If a brand is trying to raise $1 million or less via crowdfunding, they’re required to share financial statements that are reviewed by a third party such as a certified public accountant. Putting together statements requires time and money. It cost Nopalera $3,800 and over a month to complete. Having financial documentation up to date and organized speeds the process.

If a brand is raising more than $1 million, a full audit is required. In an article on her crowdfunding experience for the magazine Inc., Lewis emphasizes the audit should be completed in advance of raising crowdfunding, and it took CurlMix six months to finish. In its first crowdfunding effort, CurlMix initiated the campaign before conducting the audit and was forced to get backers to opt in again to collect the money it raised.

Lewis writes, “Everyone, including me, thought I raised the full $5 million, but only half double-opted in after my financial audit was completed. I had to raise the other $2.5 million all over again, so what should have taken days ultimately took nine months to close.”

Set a realistic Crowdfunding Target

Wefunder takes 7.9% of a company’s crowdfunding till if its campaign is successful. Honeycomb charges a $449 posting fee and a 6% to 8% loan origination fee based on the amount raised. To fellow founders, Velasquez recommends, “Raise more than you think because some of that is going to Wefunder.” Nopalera’s Wefunder target was $250,000, about $362,000 under what it brought in.

Baude NY set its minimum funding target at $30,000. The brand was pursuing angel investment alongside its campaign on Honeycomb. In addition, it was still finding its footing, having just launched months earlier in January. “We don’t have as large of an audience as maybe some other brands,” says Ha. “So, we wanted to be conservative enough that we could raise what we needed to fund our initiatives while being realistic enough to make sure that we hit those minimums.”

Expect To Be Inundated By Questions

For many people supporting brands’ crowdfunding campaigns, the campaigns mark their first time investing. They have tons of questions and expect answers to their questions. Velasquez admits fielding questions made her nervous. She says, “I knew that there would be a whole education around it…whereas when you’re talking to institutional investors, that’s absent.”

Crowdfunding platforms handle most of potential investors’ inquiries. They have frequently asked questions sections that address common questions like, how much is your company worth? How much do I own in the company? What’s the minimum I can invest?

Wefunder has an “Ask A Question” section on campaign pages. Velasquez instructs crowdfunding brands to encourage customers to post questions on campaign pages or in public forums to inform other curious people and prevent the brands from having to answer the same questions over and over. Arshad appeared on podcasts and a webinar to educate people about Samreens Vanity’s crowdfunding campaign.

Promote, Promote, Promote

Arshad underscores that the majority of work on a crowdfunding campaign begins after it’s set in motion and spreading the word to potential investors can be the hardest part. Velasquez says, “Just because you’re creating the Wefunder campaign doesn’t mean that Wefunder is going to go and raise the money for you. Wefunder is merely the receptacle so that you have a means to accept the money. Yes, they’ll put you in their newsletter, but there’s tons of brands in their newsletters, so you really do need to do the lifting and send it to your people.”

Podcast, webinar and event appearances are popular promotion tactics. CurlMix landed press hits to amplify its crowdfunding campaigns. Lewis equates the crowdfunding process to launching a marketing campaign. She says, “How many times can I show up in people’s feeds dancing and showing them the dollar total? How many friends of mine will share the campaign? How many commercials or TV shows can I be on? It’s a numbers game.”

Lewis suggests brands think of crowdfunding promotion similar to how they think about website conversions. “If you get 100,000 visitors, only 10% are actually going to click through to give you their email, and then only another 1% are actually going to purchase,” she says. “That means you might need a 100,000 visitors to your actual campaign page, and if your personal site or their business site is only getting 10,000 visitors, think about how much work you’re going to have to do to get to that 100,000 mark.”

Timing is key. Lewis has seen that people are typically more engaged in the beginning and end of a crowdfunding campaign. In its second crowdfunding campaign, CurlMix raised 40% of it in the initial seven days, and the rest in the final 10 days. If possible, promos should be ramped up during the periods of greatest interest.

Take advantage of assistance crowdfunding platforms offer. Honeycomb provided Baude NY a free videographer and guided the brand on creating a profile and marketing. Nopalera tapped Arc Fund, an initiative aimed at underrepresented startup founders that offers three months of fundraising and consulting services, according to its website. Arc Fund filled Nopalera in on best practices, built its Wefunder page and gave it email templates.

The extent of promotion will depend on a brand’s reach. Nopalera leaned heavily on its email list of 43,000 people to promote its Wefunder campaign. Lewis says, “You don’t need a whole lot to have a successful crowdfunding campaign, you just need people who are engaged.”