♟️ Startup Investing's Million-Dollar Game

Over the past year, there have been dozens of startups that have raised $1M+ on funding portals like StartEngine, Wefunder, and Republic.

What most investors don't know, is that there is a game being played behind the scenes to maximize funding

The stakes are high - play the game just right and you may be able to add hundreds of thousands of dollars to your funding round. Potentially millions.

Let's break it down:

Part 1: It's all about location, location, location

Startups raising through equity crowdfunding receive money from 2 sources; their own network and the crowdfunding community

Depending on which portal a startup is using, you can expect the crowdfunding community to put up 30-60% of your round.

For example, StartEngine claims that an average of 55% is funded by its own community.

As the crowdfunding community makes up a significant chunk of each raise, it's increasingly important to know how to maximize funding with this segment.

To do this, it's essential to keep your startup Above-the-Fold

Most platforms highlight startups that have the most funding dollars/momentum on their homepage, and this prime placement is crucial for turbocharging investment

This premium exposure is make-or-break for most startups. StartEngine receives 1.4M in monthly website traffic, but users are only viewing an average of 3 pages 

What this tells us is that most users go from the homepage to a single startup, than leave. If we were to see an average of 6+ pages, this would indicate that the crowdfunding investor is browsing multiple startup investments, but they're not

So if you want the firehose of website traffic to go into your startup, you need to be positioned on the front page. Failure to do so results in never being seen by 90%+ of investors.

Part 2: More funding = More Funding

Every crowdfunding portal has fairly standardized marketing efforts for their startups in order to avoid the perception of favoritism

Each platform has funding thresholds that trigger an email blast to be sent to hundreds of thousands investors

For example, startups that hit $50k in funding qualify to be included in Wefunder's email digest. These emails are again a great source of exposure and often translate to more investment dollars….

Which open up more marketing efforts. Which raise more money. Which gain premium positioning on the website.

You get it.

It's all one big game that's played out behind the scenes and boils down to one attribute: momentum.

Here are 3 things I would do as a founder to play the game well:

1. Position my fundraising round around the time that I am expecting positive news/developments. I want to start with a pop, and continue that momentum with good news

2. I would also consider timing my round to be in the month of May. Why? Because that is when there is the least amount of competition from other startups raising funds, as demonstrated in this chart from Kingscrowd. Less competition makes it easier to be featured on the 'Most Momentum' and 'Most Funded' sections.

3. Institute an early bird bonus. Nothing gets investors motivated like a time-sensitive deal. This spurs early investment and can put you on the right path to hit funding milestones & earn marketing efforts