How We Ran a Successful Reg CF Campaign (During a Global Pandemic)

If a band of creative nature nerds can do it, so can you!

I am a first-time COO of a startup I helped found three years ago. Before that, I didn’t know what a COO was. I’ve been an amateur biologist, professional scuba diver, and freelance wildlife filmmaker for my entire adult life. I am 28. I have only run one equity crowdfunding campaign, and it was interrupted by a global pandemic. Using all of this wisdom and experience, I present to you this “guide” on equity crowdfunding as I recount our story of how my team at Mammalz raised 260% of our goal over six crazy months.

Should you and your company find yourselves in need of alternative funding during this pandemic, this may be useful. Take it with a few grains of salt and do your research.

Why We Chose Reg CF

Back in November of 2019, when wearing a mask in public was only common one night a year, the Mammalz Beta had been live for a few months. In that time, we had developed dozens of tight relationships with our community of early-adopting nature lovers. Their excitement about our new niche content platform hoisted the sails of our ship, but our tailwinds were nearly gone. If we were going to continue making progress, we needed more funding.

Because Mammalz is a community-based platform with a community-driven mission, it only made sense for us to seek community-ownership. We knew from the very beginning that at some point in our development, we could probably run a successful equity crowdfunding campaign. Now, we actually had hundreds of potential “investors” — our platform’s creators and fans — to back us. And with unemployment rates at an all-time low and stock market values rising each day, investor confidence would surely be in our favor. Yikes.

Side note: If you’re thinking, “Equity crowdfunding? You lost me,” let me clarify.

For most pre-revenue startups in search of operating capital, the word “no” becomes repetitive. Pursuing a traditional path like venture capital always seems to be our first fundraising strategy, but the hard reality is that not very many companies are going to be lucky enough to find that angel. And to be fair, giving a passionate stranger $100,000+ to try out their idea does seem insane.

Wouldn’t it be awesome if startup teams could just find 1,000 people to give them $100 instead? Quite a few entrepreneurs thought so, too. As of 2016, it is now legal for anyone — regardless of their income or investor accreditation — to invest in a startup through what’s called Regulation Crowdfunding (often abbreviated Reg CF). Startups can now apply to run what is essentially a Kickstarter campaign, but instead of only offering perks like DVDs or free lunches, they can also offer equity in their companies.

It’s worth noting here that there are two other types of equity crowdfunding: Regulation A and D. Both of these types are designed for later-stage companies. You can learn more about each type of equity crowdfunding in this article.

Okay, back to our story. Given our situation and timing, launching a Reg CF campaign that could fuel our company toward a public launch seemed like our best option. Now that I’m on the other side of the mountain peering back, I can confidently say we made the right choice. That said, Reg CF is not a good option for most companies, nor does it make sense to launch a campaign of this style at any stage of development. In my opinion, there are only two broad types of companies who should consider Reg CF:

  1. Companies who have affordable consumer products to sell in a traditional B2C model (ex. new lines of clothing, hardware tech, subscription-based goods, etc.)
  2. Companies who have at least one B2C model that is dependent on community-building through consumer interactions (ex. fan-funded movies, collaborative public projects, etc.)

Your company should also be aiming to make a positive impact on existing industries and/or humanitarian or environmental issues. Without the impact element, neither the equity crowdfunding investor community nor your own industry’s frustrated workers will have a good enough reason to invest. Also, if you’re reading this after waking from your 2020-2021 hibernation in some future, much more pleasant year, you may have missed some important social and cultural movements. If your company’s mission doesn’t have an impact element, you should probably reconsider your approach.

Mammalz checked all of these boxes, so it was time to get started.

The next few sections serve as an introduction to Regulation Crowdfunding strategy. If you want to skip these tips and jump straight into the rest of our story, scroll on down to Phase One: Building Momentum to Launch.

Choosing a Platform

Equity crowdfunding has become increasingly popular within the last few years, so to take advantage of the growing demand, there are now several competing Reg CF platforms to choose from (StartEngine, Republic, and SeedInvest to name a few). Each of them offers slightly different advantages, so how do you choose the right one?

There are several factors to consider when choosing a platform, but first, I would like to make one point very clear. The success of your fundraising campaign is not something that will come from the platform you choose. It will come from your own team’s ability to draw interested investors toward your campaign page. We went with one of the largest equity crowdfunding platforms (in terms of percent market share) and took advantage of every promotion, advertisement, and front-page feature we were offered to generate as much interest from their embedded investor audience as possible. The result: only 8% of our fundraising total came from their audience. Do not rely solely on the platform you choose to drive your success.

That said, choosing the best platform for you and your company is still important for a variety of reasons. Here are some things you should consider:

  1. What is the business model of the platform? Some platforms will simply take a percentage of each investment, whereas other platforms want an equity stake in your company. Some split down the middle. Others offer different scenarios depending on your success. Allocating ownership of your company and conserving cash are two very important considerations for early-stage companies, so don’t choose a platform with a model that makes you uncomfortable.
  2. How much are your potential investors willing to spend? Minimum investment levels range from $10 to $1,000 and there are advantages to both ends of the spectrum. Higher minimums mean you can reach your goal with far fewer investors, but lower minimums mean you can build your community of “owners” to a much larger scale. If you have a consumer product business model, would having a larger community of owners be more advantageous to your company after the campaign ends? Keep in mind that most platforms allow you to assign your own minimums and change them during the campaign, so you will have some creative control here.
  3. How similar is your company to the most recently successful companies on each platform? If 10 of the last 12 companies with successful raises on one platform are selling exercise equipment and you’re developing a fantasy fanfiction app, you might want to consider another option. The embedded investor audience on each platform arrived there by investing in a previously active company, so do your research to find your most synergetic matches.

If multiple equity crowdfunding platforms fit your requirements after answering these three questions, find a contact at each of those platforms and dig deeper. What can they offer you that you couldn’t get on another platform? Legally, they can’t offer you a deal that is different from the deals they have with their existing clients, but they can offer certain perks or access to investors that you might not find elsewhere.

For Mammalz, we chose a platform that only took cash, allowed us to offer a $100 minimum, and had just recently funded multiple nature-related technology companies.

Determining a Launch Date and Campaign Length

Planning your Reg CF campaign is not an easy task and requires hours of groundwork, so don’t set yourself up for a stress explosion by only giving yourself a week to prepare. I recommend allocating 1–2 months of time for campaign preparation. The beginning and the end of each campaign are the most important and will most likely attract the largest investments, so don’t think you can just start now and figure out a plan halfway through.

Though preparation time is by far the most important factor in determining your launch date, there are a couple more considerations:

  1. Some platforms allow you to stagger the private and public launches of your campaign. You may want to consider doing a “soft launch” for your biggest investment leads before going public so that you have some money in the bag to drive momentum. Nobody wants to be the first person to invest.
  2. Don’t choose a campaign launch date (and end date) that may compete with predictable mainstream press, holidays, or massive Reg A/D campaigns on your platform. If you’re trying to make noise to attract potential investors on either date, you don’t want to suffocate under radically trending hashtags. You also don’t want to be pushed down your platform’s featured list by the larger companies raising millions.

Of course, when you need the funds is relevant to choosing your start date, but it’s even more relevant to choosing your end date. While some platforms allow for what’s called a “rolling close” — a mid-campaign deposit of funds — you should make sure you have enough operational runway to make it past your determined closing date. With some exceptions, campaign end dates cannot be moved forward, but they can be extended.

Most campaigns choose to raise over a 2–3 month period of time, but you should choose what makes the most sense for your financial situation, the speed of your team, and your target investor audiences.

At Mammalz, we gave our team of five most of December and January to plan our campaign prior to a private launch in the second half of January. We launched to the public two weeks later. Our originally planned end date was our app launch date on Earth Day, April 22nd, but as you’ll read, we encountered a major reason to extend the campaign.

Setting Your Minimum Goal

To get legal real quick, your maximum possible goal for a Reg CF campaign was $1,070,000 and will now be $5,000,000. In one 12-month period, a company cannot raise more than that under Reg CF rules. Of course, all of us willing to dish out that much equity to our investors would love to reach that maximum, but what should be your minimum?

No matter what, your minimum amount raised should allow your company to realistically operate into your next fundraising opportunities. Those opportunities should be tied to goals that are achievable within the roadmap you’ve proposed for your Reg CF campaign’s use of funds. Typically, that roadmap should take you out at least six months.

Remember, this money you are about to be collecting from fans, friends, and family is tied to love and support that should not be toyed with, so be responsible and truthful about how much you need to actually achieve your goals. If you undercut yourself and fail to reach those goals because you didn’t raise enough, you’ve essentially wasted everyone’s investments. Justify your minimum with detailed projections and a vetted use of funds, and be conservative.

Once you’ve determined what your company truly needs from this round, add 20%. It’s not unusual for 10% or more of your investors to have banking troubles or get cold feet when the time comes to confirm their investments, so don’t let that dip put you in the red. You should also account for all perk-related expenses and any fees involved in your platform’s business model. The resulting value will be your adjusted minimum goal.

Your adjusted minimum is what you should publicize as your minimum goal for your fundraising campaign. Ideally, you should be able to reach at least 50% of that minimum goal within the first few days, so start lining up some larger investments prior to launch. Without some substantial momentum from the start, you will struggle to reach your goal, so take the time you need to prepare interested investors.

What happens after you reach your minimum? Well, you can celebrate! But don’t let the fire die out! When crafting your campaign story and use of funds, consider establishing a series of benchmarks all the way to your maximum raise that correlate to new and exciting uses of additional funds. The most successful campaigns give enticing reasons to invest beyond their minimum goal, so what will you do when you double your minimum?

For Mammalz’s campaign, we established a minimum goal of $50,000 with benchmarks at several increments up to the $1,070,000 maximum.

Determining Your Equity Structure

Should you raise on a convertible note? What about a SAFE note? How about you dish out straight equity? I am in no position to answer these questions for you. Based on any previous investments on your cap table, the preferences of your founders and board, and the type and stage of your company, you’ll have to decide which structure is right for your raise.

Keep in mind that whatever you choose will have to be explained to investors without much experience in investing, so make sure your team understands — in layperson terms — how you’ll be issuing equity.

On a positive note, most options are supported by each equity crowdfunding platform, so you’ll have the flexibility to choose what will work best for your company.

To stay consistent with our previous investments, our team at Mammalz chose to issue our investors convertible notes. Because hundreds of convertible note recipients would look chaotic on our cap table, we assigned a lead investor for the round, allowing us to consolidate all of the investments into one line.

Perks

Perks are an exciting and wildly creative topic of discussion for any team about to set sail on an equity crowdfunding adventure. They are also a kiss of death for those who get too ambitious.

Your investors are investing their hard-earned cash in your company because they believe in your team, not because they want a free hat or a private dinner. If you provide perks at every investment level that are most likely not influencing the decisions of your investors, all you’ve done is waste a percentage of your funds raised and your team’s work hours on issuing out perks.

If you do decide to offer perks, choose wisely, and make sure they are perks that are easy to issue and hold actual value to your investor audience. Make sure to account for any perk-related expenses in your campaign’s minimum goal.

Our investor audience for Mammalz consisted primarily of people who love nature and travel, so we put most of our perk eggs into one basket: a free trip. For every increment of $250,000 raised, we would give away a trip of a lifetime to a choice of three wildlife safari destinations. Increasing investment levels rewarded increasing numbers of entries into the drawings. The trips could also be earned instantly at large investment levels — a niche-appropriate way to reward our biggest supporters.

Establishing a giveaway like this required some extra legal work and would become a large campaign expense (despite our connections in the travel industry), but by setting the giveaway trigger to $250,000–5X our minimum goal — we knew the perks would be worthwhile to offer. The trips would also give any lucky winners perfect opportunities to create content on Mammalz, the single most important way we maintain user retention.

In addition to the trip giveaway and a few high-level signed art perks (our CEO is a talented conservation artist). Which perks ended up being the most effective? You’ll have to read the rest of our story to find out.

Phase One: Building Momentum to Launch

The holiday lights were going up, but we were not working any less. It was now December of 2019 and we were counting down the days until our campaign request was approved by the SEC.

Our team of five now had new hats to add to their collections; each of us took on full-time roles preparing for our Reg CF campaign launch. I was organizing our operational strategy and breaking out the next four months into sprints, all while revising our financials, updating all of our pitching materials, and designing our campaign’s story. My co-founder was securing investment leads and overseeing the whole project. Our marketing head was frantically writing press releases and newsletters while vetting out potential advertising partners. Our head of data science was generating cold contacts and advising our marketing strategy. Our head of user experience was editing dozens of original videos and graphics in preparation for weeks of social media hype.

The Mammalz Team, pre-six-feet-of-separation.

This shift in our responsibilities at the company was a key part of our success. Running a campaign like this really is a full-time job for multiple people, especially at the beginning and end of the campaign schedule. For us, it was worth the investment of time and energy. At the time, this campaign seemed to be our only chance to stay afloat, so we were giving it everything we had.

One of the most challenging projects leading up to launch was the creation of our company’s campaign landing page. How do you tell the story of your company in a way that will convince first-time viewers to invest their own hard-earned cash in your venture? For us, telling that story visually was key to driving engagement. This was relatively easy for us, considering our founding team members were all filmmakers, photographers, and graphic designers.

My primary words of advice for writing your story: keep it transparent, passionate, and easy to understand. But just in case readers want to dig deeper, back up everything you claim with accurate data and external links. Building credibility for your team is important, but above all, you need to inspire readers to fall in love with your founders. Passion is infectious, so tap into it. If you’d like to read through our story as an example, you can find it here: https://wefunder.com/mammalz/about

Side note: We revised our story with feedback from over 50 of our closest community members, friends, and family before we ever sent investors to the campaign page. Remember that the people you’re targeting have a wide variety of professional backgrounds, so use the brains of the people you know to your advantage. You’re not in this alone.

By January, we had a few hot investment leads who had promised to invest in our soft launch, a phase we determined would last two weeks prior to our public launch. We needed some dollar signs on the scoreboard to prevent the inevitable “nobody wants to invest first” blocker. Through a series of private meetings, we were able to ensure each investor that they were not going in alone and guaranteed them early-bird terms. Offering early bird terms was a feature of our platform that certainly improved our ability to generate a sense of urgency at the start of the campaign.

Meanwhile, our marketing team was generating pre-launch hype across our social media channels. We made a conscious decision to not advertise the investment opportunity on the Mammalz platform, so instead, we targeted our own community members through our mailing list. Our community got the inside scoop on the early-bird investment opportunity before we told the public on social media. To help them understand the opportunity, we wrote an introductory blog and designed an easy-to-comprehend graphic.

Our early-bird discount, explained simply.

To our surprise, by the end of the soft launch period, we had exceeded 90% of our campaign’s minimum goal. Launching to the public with this much momentum was going to slingshot us past our goal. We were confidently ahead of schedule.

Phase Two: Launching and Executing Fundraising Strategies in Stages

Within 24 hours of our public launch, we exceeded our $50,000 minimum goal. W00t! Despite our pride, our celebration was quickly disrupted by desires to leave our minimum in the dust. How would we keep this hype train rolling? It was time we returned to our project plan.

Many of us in the startup community have at least heard the words “sprint” and “agile development”. In overly simplistic terms, agile development is a highly collaborative project execution strategy that breaks large project goals into bite-sized pieces. Each of those mini-goals is completed over consistent chunks of time (often two-week increments) which we call sprints. At the end of each sprint, the work is evaluated for effectiveness and efficiency, after which the cycle improves and continues.

In my experience as the chief of operations at Mammalz, elements of agile development apply well to a wide variety of projects our company takes on. This Reg CF campaign was certainly no exception. In fact, I’d say it was one of our most successful executions of agile development to date.

Our ultimate goal was to raise as much as possible before the end of the campaign, so we set our eyes on the $1,070,000 legal maximum (at the time). Working in reverse, we broke the 3-month (later 6-month) campaign into two-week sprints that would hypothetically take us all the way to the top. And at the end, a big investor “thank you” party was planned to bring us home. For each sprint, we defined a target investor audience and, once again, worked backward to define our strategies:

  1. We declared each of our target investor audiences. Based on what we knew about our community at Mammalz, we were able to identify which “supergroups” of nature and technology fans would be most likely to invest.
  2. We determined where each investor audience was listening. To plan our marketing for each sprint, we explored where we could empower each target audience most effectively.
  3. For each investor audience, our marketing content embodied a relevant theme. Now that we knew where each audience was listening, we brainstormed how we would deliver each call to action in a thematic way.
  4. We set decreasing investment minimums for each audience. Each investor audience has a different average income and willingness to invest. Our investment minimum for each sprint reflected those averages. We scheduled each sprint based on this minimum so that we could gradually decrease the minimum throughout the campaign.
  5. We established appropriate investment goals for each sprint. Based on the number of hypothetical investors and the minimum investment from each audience, we set cumulative fundraising goals every two weeks. These added up over three months to bring us to the legal maximum.

Below are two basic examples of sprints we executed toward the beginning and end of the Mammalz Reg CF campaign.

One of our first sprints after our public launch was our “Mammalz Vision” theme. We wanted to start with a high investment minimum near the beginning of the campaign to encourage larger investments by those who could afford $1,000+. We assumed these investors would be already comfortable with this format (i.e. serial crowdfunding investors) or they would already know and trust our team (i.e. close friends and family).

To target these audiences, we relied heavily on direct outreach. Our head of data science crafted lists of LinkedIn leads based on similar investments each lead had made in other Reg CF campaigns. I approached each of these cold introductions with hand-crafted messages. These messages emphasized aspects of Mammalz that each lead may find most interesting based on their careers, past investments, and social media interests.

Once we captured the interest of these investment leads (either with social media follows or email subscriptions), we followed up with a video series introducing our vision for Mammalz. These short videos, organized by division, both established our team’s credibility and provided inspiration. They also enabled us to secure new leads based on niche interests, further diversifying our investor audience.

Alexander Finden speaking about the Mammalz Creator Partnerships portion of our Vision series.

By the end of our first two sprints, we had nearly doubled our investment total. We were on pace toward reaching our investment maximum. But, when March hit, everything changed. The stock market was crashing, as was the confidence of our investor audiences. Direct message conversations and email chains went silent, or simply replied, “Given the recent news, we are no longer in a position to consider new investments.” COVID-19 was here, and at the time, none of us knew what we were in for. It was time to get creative.

Phase Three: Pivoting When the Global Pandemic Hits

Once it became clear that investors had closed their doors and the minds of the world had shifted from business to personal affairs, we slammed on the breaks to shift our strategy. No matter how hard we tried, we weren’t going to secure additional funds until the future of the economy was more clear. So, now what?

First, we resubmitted our forms with a new campaign end date in July. We needed to wait out the storm, but we also needed time to think. Most of our existing plans were no longer relevant. For one, we were certainly no longer ending the campaign with an in-person party. That said, we did know a way we could keep up some hype and show our value. We were, after all, a team of creators with our own content streaming platform.

Our outward focus shifted inward, challenging both our platform and our community to shine in the limelight. We had a real opportunity — a quite unexpected and emotionally complicated opportunity — to make Mammalz a beacon of hope in a time of darkness. But first, we needed to improve our technology and move out of beta. Projects we had planned to start months after the campaign were started immediately. These projects needed to be completed with enough time to successfully close out our campaign, so tensions were high. To accelerate our pace, we entered another rolling close and used the funds to hire some helping hands. By the end of April, we had successfully gutted and upgraded our content streaming systems for scale. We had also launched the first iteration of our Creator Partnerships program, welcoming dozens of new and excited nature content creators into our community. By Earth Day, April 22nd, we were ready to unveil Mammalz to the public.

Our vlog recounting the Mammalz team’s launch party preparation for Earth Day.

Our Earth Day launch brought hundreds of new community members into the Mammalz ecosystem, many of whom were also members of our investor audience. Investor confidence was still too low to shift our focus back toward the campaign, so we focused on building relationships. For many of our users, especially those who were locked down in self-quarantine, Mammalz became the way they stayed connected with their fellow nature fanatics and with nature itself. Our investor theme weeks evolved into user-generated content theme weeks. Fundraising video productions became outdoor live stream productions. We were running our company with seven hats on each of our heads, achieving benchmarks we promised at fundraising levels five times what we had already raised.

Then, toward the end of June, something else incredible happened. The stock market was on its way back up and investors were ready to talk. Without abandoning the fun times we were generating on Mammalz, it was time to rekindle our campaign.

Phase Four: Building Momentum into Close

We now had success stories to tell, a real product to show, and an embedded audience. Though we couldn’t reference our beautiful sprint whiteboards in our abandoned coworking office, the photos we had taken helped us brainstorm a new sprint schedule that was better catered to the times.

To start it off, we knew our community members were aching to experience the natural world again, so our trip giveaway perks became the focus of our first sprint. We also knew everyone was hurting financially, so we dropped our investment minimum to the lowest level. By the beginning of July, our last month to raise funds, we had produced dozens of campaign videos, web pages, and social media posts in preparation. The marketing cannon was loaded to the brim, and this was our last shot. We were prepared to give it everything we had.

Mammalz Head of Marketing Pam Voth’s travel tips video from our campaign perk series.

Regaining momentum with higher-level investors still proved to be challenging, but to our pleasant surprise, many of our Mammalz community members rallied to support us. Even some of our content creators, who had now seen the value in our platform, became proud investors in our collective futures. As badly as these community-level investors wanted to travel and immerse themselves in the natural world, the trip giveaways were secondary to their desires to support our mission. They wanted to be part of something greater than themselves, and our perks were, well, no more than perks. Proud and humbled, we once again altered our marketing strategy.

As we entered the last two weeks of our campaign, our mission and vision returned to the spotlight. Once again, each of our team members created a video for our investor audiences, and this time, we had some major progress to report. This mini-series invigorated higher-level investors, giving us the larger hits we needed to pass our next benchmark.

Mammalz Head of UX Sabrina Rodriguez’s segment of our Journey So Far series.

Instead of hosting an in-person party to close out the campaign, my co-founder Rob and I hosted virtual “parties” in the format of live streams across social media. These interactive streams gave our friends, families, and Mammalz community members the chance to ask us anything they wanted. They also enabled us to build some hype as the countdown clock ticked toward zero.

By midnight, it was all over. I remember feeling a rush of relief flood over me, but simultaneously, I felt an immense sense of responsibility for what was to come. We had successfully raised 260% of our campaign goal over six of the craziest months of our lives, and it was worth every ounce of effort. Now, not only did we have the funding we needed to make Mammalz a success. We also had a community of supportive fans and talented creators to help us get there.

Concluding Your Campaign — Investor Relationships

Since closing our campaign, we have sent regular updates on our company’s progress to each and every investor. Staying connected and transparent with your investors after a campaign is critical. Earning their continued respect will help establish your credibility for future fundraising rounds, even if you do not follow a crowdfunding model.

Being responsible with the funds you’ve received is also very important. Investors at any level will want to know where their money is being spent and whether or not you’re hitting the milestones you established. At Mammalz, we’ve had the luxury to focus our spending on projects that help advance our platform’s technology and our creators’ resources. Our team has worked since July without pay, squeezing as much value as possible from our campaign’s funds.

On that note, I’d like to put the rest of my team on a pedestal and thank them for their endless efforts to push through seemingly impossible setbacks. I certainly could not have progressed Mammalz to where it is now without each and every one of them. Their dedication and true passion remind me why it is that we took on this crazy venture in the first place.

If you’ve made it to the end of this “guide”, I thank you for your time and I welcome any questions or comments. And for those of you who are embarking on their own Regulation CF journey, I wish you safe travels! If a band of creative nature nerds can do it, you can, too.

For more about Mammalz and for future updates on our company’s progress, you can visit our community site.

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Alexander Finden

Co-founder of Mammalz, underwater cinematographer and Divemaster