For the new breed of entrepreneurs turning to the internet to build their businesses, online crowdfunding can create an investment community from a pack of loyal brand advocates. It’s up to the business itself to communicate with these new investors. Well known platforms include Kickstarter, a platform for creative projects, and Indiegogo, which adopted the latest crowdfunding format: equity crowdfunding. Equity crowdfunding allows users to buy tiny shares of the businesses they support – popular sites in this space include Crowdcube and Seedrs.

A strong communications strategy can help to unite communities around innovative and ground- breaking business. One outcome of the rise of crowdfunding is the emergence of a new type of investor. A brand advocate first and foremost, this new breed of stakeholder has a vested interest that is often more emotional than it is financial. A traditional investor relations approach is not suited to this group, crowdfunded companies should think about the unique needs of their crowdfunding investors, and balance those needs with the often limited resources at their disposal. Done well, crowdfunding is a unique opportunity that creates brand engagement as well as funding. But this is a young space and it requires a new set of communications guidelines.

According to a study conducted by market research specialist, Juniper, the crowdfunding industry is likely to, “See an accelerated growth from the lucrative, but less well-known, method of funding known as ‘equity crowdfunding.’” Unlike traditional investments from venture capitalists and angel investors, the crowdfunding model allows ordinary people to invest from as little as £10. If the business seeking funding receives enough investors to reach its total target, each of those investors will own an interest in the company. This differs from the traditional crowdfunding model, which tends to gift products or services to those who offer their support. The crowdfunded companies could therefore end up with hundreds, if not thousands, of investors. Mouldable glue company, Sugru, which crowdfunded on Crowdcube, reached 338% of its target (£3.4m) and has 2,375 investors. Sugru has a tremendously engaged community, carefully fostered over 10 years. Because of this, the company knows exactly how to communicate with its investors. Many of those who invested in Sugru were already brand advocates and relished the opportunity to become more involved in the business.

Crowdcube is the world’s leading equity crowdfunding platform, it has funded over 300 businesses and has been through three crowdfunding rounds itself. Luke Lang, co-founder and CMO at Crowdcube says, many of those who seek investment on Crowdcube are start-ups and small businesses, but more of the people behind those businesses are experienced professionals who have previously held senior positions at big brands. This group, therefore, may have a better understanding of the importance of communications. There are also some more established organisations that use Crowdcube. In September 2015, the Eden Project, a visitor attraction in Cornwall, used Crowdcube to fund a new learning centre in its education centre. Eden Project raised its initial target of £1m in just five hours, and went on to raise a total of £1.5m in less than 24 hours; the largest amount of capital ever raised by an equity crowdfunding platform.

However, start-ups and small businesses remain, for now, the most likely to use crowdfunding platforms. They are, therefore, less likely to have experience in investor relations or corporate communications. However, they do often have an innate ability to engage with people, as demonstrated by their ability to reach the funding target in the first place. Lang says, “Some of our best communicators are from start-up and early stage businesses. I think when you’re a young company, you understand the potential of having a core group of brand advocates.”