How much does an equity crowdfunding campaign cost?

How much does an equity crowdfunding campaign cost?

20 October 2016

EQUITY CROWDFUNDING

equity-crowdfunding

The research conducted by Crowd Advisors and EdiBeez, under the patronage of the Italian Equity Crowdfunding Association, has come out. It analyzes the fundamental aspects that can make a crowdfunding campaign a successful project.

The study was conducted among the startups that have led campaigns in Italy since 2013, i.e. from the beginning of the platforms' operation: to date €6.09 million has been raised, but what economic effort has been used by the bidders to set up the campaigns and involve the online crowd and possible new investors?
The analysis focuses on the communication and marketing activities employed, without forgetting other ancillary costs related to the notary and other necessary administrative fees.
In fact, in almost all cases, these two aspects are outsourced, since start-ups, especially in the early stages of their life, do not have specialized figures within their teams.
Let's take a look at the main indications that emerged, leaving the in-depth analysis to the entire report.
The average fundraising objective of the companies surveyed was 165,000 euros, of which 39% had an objective of less than 100,000 euros; an average of 6% must be deducted from the amount collected, which corresponds to the average success fee requested by the platforms as remuneration.
For all the activities taken into consideration, there was a higher success rate if the activity was entrusted to external consultants rather than carried out internally. A total of 38% of the companies spent less than €3,000 on the campaign and 31% spent between €5,000 and €10,000 (excluding the success fee due to the platform). However, there is no direct correlation between the amount spent and the success of the campaign
As far as communication actions are concerned, 23% did not prepare any communication plan, but this shortcoming was penalizing: in fact, only 33% of the projects were successful.
The preferred means of communication was Facebook (used in 100% of cases), followed by "personal relations" (77%) and LinkedIn (69%).
In conclusion, the total amount of €5-10,000 (declared by 31% of the start-ups surveyed) corresponds to 2.5-5% of the capital raised by start-ups through successful campaigns. It should be noted, however, that a further 8% of start-ups spent more than €10,000, while 38% of the companies surveyed spent less than €3,000 and 15% even less than €1,000.