In today’s digital age, social media has helped transform the way people connect, communicate, and engage with others, making it an invaluable tool for startups raising some types of capital. Social media platforms can offer the ability to reach a vast audience, tell compelling stories, and build lasting relationships with potential investors. In this blog, we’ll explore leveraging social media for fundraising – from crafting engaging content to maximizing reach and potentially turning supporters into loyal advocates.

Leveraging Social Media for Fundraising

General Solicitation

General solicitation is a public advertisement of a startup raising capital. There are some instances in which general solicitation is allowed under SEC security exemptions, but not in others. Offerings that raise capital under Regulation D 506(b) cannot be publicly marketed due to the nature of being a private offering that is only available to accredited investors. Offerings raised under Regulation Crowdfunding, both tiers of Regulation A, as well as Regulation D 506(c) are allowed to use general solicitation communications.

Using general solicitation communication can be a great way for startups to deliver news to potential customers and investors that they may not have been able to reach otherwise. Some main forms of these communications can be things like newspaper and magazine ads, public websites, TV broadcasts, and radio broadcasts. General solicitation today also can involve social media, which this blog will discuss in depth about how to leverage social media for a startup trying to raise capital.

Leveraging Social Media

Social media can be a powerful tool when startups are raising under one of the allotted exemptions. Startups can amplify the ability to connect with potential customers and investors quickly, efficiently, and in ways that may be more personal and impactful compared to traditional methods.

3 Key Reasons for Using Social Media

Widespread Reach: Social media platforms allow startups raising capital to reach a wider audience instantly. This reach can make it easier to spread awareness about the startup, which could lead to more potential investors who may not have been reached otherwise.

Targeted Marketing: Using social media platforms allows startups to use targeting tools that can narrow audiences by interests, demographics, and behaviors. Targeting allows the startup to deliver its message to the people who are most likely to support it, helping to make campaigns more efficient and effective. Some platforms offer paid options in the form of paid ads to assist with targeting and boosting engagement, however, with limited resources, the free options within social media platforms can still provide beneficial information.

Cost-Effective Promotion: Promoting that a startup is raising capital on social media can also be a more cost-effective option compared to other traditional advertising methods. Broad exposure without the high cost associated with advertisements can allow the startup to fundraise and promote the campaign.

Social Media Best Practices

There are many reasons why a startup may want to follow best practices when marketing their fundraising online, a major reason can be to avoid non-compliant marketing with the regulators. Startups can promote their fundraising campaigns online to help gain traction and inform investors who may not have seen it otherwise, but to help ensure the correct and appropriate information is being shared, a startup could review and follow these best practices.

1. Provide Helpful Information

Providing information that is helpful to investors and potential customers may seem obvious, but for these potential investors to fully understand the startup’s goals, effective marketing can contribute to the overall success of a campaign.

Informational webinars and virtual events provided on social media can serve as great examples of helpful information that can be given to potential customers and investors. By consistently sharing valuable and educational content, startups can build trust and engage potential investors. Sharing information about why the startup was founded, what the startup hopes to achieve, the change the startup wants to drive, and other important notes from the startup may allow social media platforms to be used as a resource, not just a solicitation platform.

2. Set Up a Content Calendar

Setting up a content calendar can be a helpful way to organize the ideas that a startup might have about what they want to post to get out all the information to their potential customers and investors. To ensure that a startup is not continuously repeating the same information in every post, spending the time ahead of posting content to write out what each post could say can be a good idea. Potential customers and investors want to know as much as they can about the startup before choosing to invest, and a collection of posts each month can be a great way to showcase the information they may be looking for when viewing the company’s social media.

3. Post Regularly

In addition to creating a content calendar, the startup may want to also focus on posting regularly to the platforms they are using. There are lots of different ways to look at this best practice, so a startup may want to determine a weekly schedule and implement it on their platforms. Depending on time and resources, startups could start by posting a few times a week and then consider increasing post frequency based on overall engagement with the posts or on the platform in general.

Creating posts can feel daunting at first, so for a startup, having images and videos that highlight the important, interesting, or even necessary parts of the business may be enough to grab the attention of potential customers and investors. Carousels, or multiple images attached to one post, can also be a great way to showcase important parts of the business and get across the information you need without having to make four or five different posts about the same thing.

4. Be Active on Platforms

Similarly to posting regularly, startups should aim to be active on the platforms that they are using. Startups can use as many platforms as they see fit for their business. For example, a startup that is aimed toward technology development and AI may choose to focus its marketing and social media presence on LinkedIn and X. On the other hand, a startup that is aimed at young parents or people with children may choose to focus their marketing efforts on platforms that these types of people would be using: Instagram, Facebook, and TikTok. If a startup has limited time or resources for leveraging social media, it can focus on the platforms that its target customers are on and utilizing regularly, by potentially only working with one or two platforms as opposed to four or more.

In addition to posting on the correct platforms, startups should be monitoring the activity on the platform and be ready to respond to comments or direct messages (DMs) that they could receive from potential customers and investors. Interacting with them on social media can be another great way to gain traction with potential investors.

5. Compliance with Regulatory Guidelines

When raising capital, startups should be aware of different kinds of marketing rules and guidelines that exist with some of the regulators such as the SEC and FINRA. One example of many important guidelines as a startup, is to not promise huge results when informing potential customers or investors about an investment opportunity. A startup’s marketing materials can be broad and include marketing language, however, the startup may not falsely lead investors to conclusions that are false or contain any kind of guarantee about the performance of the business.

What if I’m not Raising Capital?

Maintaining a strong social media presence can be important for startups to increase brand visibility, engage with customers, and promote their products cost-effectively. It may help startups to build trust by sharing their story, showcasing their values, and creating a unique brand personality.

Social media can also provide real-time feedback from customers, offering valuable insights for refining products and strategies. Additionally, it offers a platform to monitor competitors and industry trends. Overall, a consistent and active social media presence can help build credibility in a competitive market.

Even if a startup is not actively raising capital, it can still be important to maintain a strong social media presence because it might choose to raise capital in the future and a strong history of social media presence may be able to help future fundraising endeavors as investors research the startup in which they are looking to invest.

Final Thoughts

In the fast-paced digital world, social media has emerged as a powerful tool for fundraising, offering startups a cost-effective, targeted, and expansive platform to connect with potential customers and investors. By leveraging social media, startups may be able to reach a broader audience and build meaningful relationships.

It’s valuable to adhere to regulatory guidelines and best practices to avoid legal complications, particularly when engaging in general solicitation. Whether startups are new to social media or looking to optimize their fundraising efforts, these strategies may help make the most of their online presence and boost the startups’ campaign visibility.

Want to learn more about raising capital for your startup? Check out the following MicroVentures blogs to learn more:

Is your startup ready to raise capital? Apply today to raise funding with MicroVentures!

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The information presented here is for general informational purposes only and is not intended to be, nor should it be construed or used as, comprehensive offering documentation for any security, investment, tax or legal advice, a recommendation, or an offer to sell, or a solicitation of an offer to buy, an interest, directly or indirectly, in any company. Investing in both early-stage and later-stage companies carries a high degree of risk. A loss of an investor’s entire investment is possible, and no profit may be realized. Investors should be aware that these types of investments are illiquid and should anticipate holding until an exit occurs.

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