If you’re considering pursuing a crowdfunding raise for your startup or preparing to launch one, it’s important to know how best to communicate with the public about your raise. Whether it be on a podcast, in an interview, or on a webinar, you should have a game plan on how and when you will talk about your raise – including what you should and shouldn’t say.
Here are a few areas you should be able to talk about with confidence as well as things you should avoid when communicating publicly during your raise.
Pre-Launch Communications
Before we dive into how to talk about your raise, it’s foundational that you have an understanding of SEC rules regarding when you can talk about your raise.
As rules currently stand, the SEC dictates that issuers cannot make any kind of public or private communication about their raise before is it live. This includes hints, social media posts, countdowns, sneak peeks, etc. With the SEC’s proposed rule changes, this could change in the future, but as of now, you may only talk about your raise when it is live on the platform.
These current restrictions also prohibit “conditioning the market.” This means that marketing efforts leading up to a raise should not increase in a significant way. You should continue to advertise and market your business as usual. If you do plan to change your marketing strategy in any drastic way, we recommend talking to your legal counsel beforehand to make sure you’re not breaking any SEC rules.
Terms vs. Non-terms
Another differentiation to know before you begin talking about your raise once it has launched is “terms” versus “non-terms” as defined by the SEC.
- Terms communication – details about the offering, including the amount of securities offered, the type of securities offered, the closing date of the offering, the price of the securities, etc.
- Non-terms communication – more general information about your company and its product, including a statement that you’re conducting an offering, the intermediary conducting the raise, a link to the offering page, and facts about the business
You can use either type of communication; however, they cannot be mixed, which is tricky, because non-terms communication is pretty unavoidable when you’re talking about your raise. This is why, generally, whether it’s through social media, email, an interview, a webinar, or a press release, you just want to avoid using any terms communication at all. For more in-depth information on terms and non-terms communications, check out our blog on how to market your crowdfunding raise.
What you can say
In whatever venue or format in which you’re discussing your raise, we have found that is it best to talk about what you know – your business. When done well, your pitch deck should give you a general outline of good talking points, such as:
Business model
Potential investors want to know how your business works, what problem you’re solving, your unique value proposition, user traction, etc. Ideally, these are all things you’re well versed in, so it should give you a wealth of things to talk about.
Product roadmap
Another talking point you want to be well-versed in is your product roadmap. What are your concrete goals as a business and how do you plan to get there? What steps have you already taken, and where are you headed next?
Use of proceeds
Potential investors will also want to know how you plan to use their hypothetical investment. This is an area where you should feel free to get in the weeds – it’s easy to rattle of categories and percentages, but it’s more interesting to hear why you’re raising in the first place and real details about how the funds are anticipated to be used.
How to say it
It’s not just about what you can say, it’s about how you deliver it. It goes without saying, but confidence is crucial to effective delivery. If you’re not confident in your business and your plans, how is anyone else going to be?
In addition to confidence, it’s important to be able to take a step back and clearly explain your business to a layperson. When you’re in the weeds every day, it can be easy to assume that everyone knows what you’re talking about.
What not to say
Aside from not mixing terms and non-terms communications, there are a few other things to watch out for when communicating about your raise. The first big one is promissory statements. This is essentially anything that is not guaranteed such as, “We’ll be profitable next year,” or “We plan is to eventually exit via acquisition.”
The next is anything that cannot be backed up. Statements like “We’re the best at what we do,” or “No one else is doing this,” etc., won’t fly. superlative language may be considered misleading, and any claims must have something solid to back them up or be phrased appropriately. “To the best of our knowledge” and “we believe” can be key differentiators when used correctly.
Lastly, any communications regarding your addressable market, industry size, anticipated growth, latest financial information, partnerships, customers, etc., should match what is said in your offering statement. Updates to these figures are welcome, but they must go through our team before they can be publicly shared to ensure all communications are consistent and all potential investors have access to the same information.
Key takeaways
In order to have a successful crowdfunding raise, communicating about it effectively while also abiding by SEC rules is key. To give your raise the best chance at success, these are three rules to remember:
- Don’t mix terms
- Speak to what you know, with confidence
- Always stick to the facts
Communications can make or break your raise. If you know what you can say, how you want to present it, and have the facts on your side, you’re in good shape.
