This blog is the first in a series that explores how entrepreneurs should prepare themselves for raising capital through Investment Crowdfunding.
Networking drops a couple of degrees
The world is a connected place. As far back as 1929, Frigyes Karinthy postulated that any two people on earth could be connected by a series of six links representing “friends of friends of friends”. This concept is known as “six degrees of separation”. The theory was popularized through the game “Six Degrees of Kevin Bacon”, where teams compete to link any actor to Kevin Bacon through six connections or less. In fact, the Google search engine assigns every actor a “Bacon number” based on the concept. In November last year, Facebook analyzed the links of their 271 million users and found that on average, any two users could be linked though only 4.7 connections. Perhaps networking has dropped a couple of degrees and the world is getting more interconnected?
What does connectivity mean for me?
Connectivity will be critically important in your quest to raise funds through Investment Crowdfunding:
- Social networking has structured, created, and strengthened individuals’ ability to exchange information, ideas, and emotions. It has simultaneously increased individuals’ reach and extended intimacy among wide networks of connections in immediate and impactful ways.
- Investment crowdfunding is “social finance.” People invest directly in the ideas of others, and use investing as a social activity to communicate with others with similar interests. Your challenge as an entrepreneur is to leverage your network by providing compelling reasons for friends, family, and others to commit their cash to your business idea.
- The prevalence of networking means that investors expect an online presence. Your online persona will be a critical tool to assess your character, reputation, and expertise.
There are four distinct groups of people you will need to consider when developing your networking strategy:
1. Family & Friends. These are first-degree connections: those with whom you have a direct connection. You can send a personal message to first-degree connections and they will respond. These are people who know you well and may have a lower threshold to justify investing in your idea.
Nurture this group to… become the first-mover investors in your idea. Their leadership acts to endorse your character. Questions may arise if few of your family and friends are committed to investing.
2. Professional Connections. While professional connections are also first-degree connections, they likely will have a higher threshold before investing because of the nature of their relationship with you.
Nurture this group to… leverage their power to validate your professional capabilities and expertise.
3. Orbiters. Orbiters are individuals with whom you do not have an active direct connection, but who are aware of you, your capabilities, and your reputation. They are orbiters because they are held in some way by your gravity, which gives you the ability to influence their behavior, albeit to a lesser extent than a first-degree connection.
Nurture this group to… demonstrate that you are a thought leader in the area related to your investment idea. If they see your involvement in some interesting activity, they are likely to take notice, and could be converted to an investor if your concept resonates with them.
4. Everyone else. If someone does not know you, and you have an investment idea that appeals to them, they will be looking for reasons to generate and substantiate a level of trust in you. The strength of your connections to family, friends, professional contacts, and orbiters provides them a powerful reinforcement. Further, their ability to examine your online presence will play a critical role in their achieving a level of comfort sufficient to evaluate your idea on its merits.
Nurture this group to… leverage the axiom that crowds attract crowds. If you can successfully attract the first three groups in a sufficient critical mass, others will follow. As others follow, it attracts even more interest. The level of interest in your idea, supported by the validation of your character and expertise will be powerful ingredients to attracting investors.
Where and when do I start?
The two 800-pound gorillas in the room are Facebook and LinkedIn. Establishing profiles on both will be the minimum accepted norm for your online presence. Facebook is primarily focused on connections with family and friends. LinkedIn is oriented toward professional relationships. Google+ is not as widely adopted as either Facebook or LinkedIn, but does provide a segmented approach to organizing your connections into affinity groups. Pinterest is whimsical. There are many other sites that are targeted to specific communities, some of which may be directly related to your area of interest.
It is never too early to begin to build your online presence. Think in terms of quantity of connections so that you can directly reach as many people as possible. Think also in terms of the quality of your connections to ensure that when you need external validation, need people to respond to a call to action, or need people to mobilize in your support, you have the critical mass.
Recognize that an online presence extends beyond merely creating connections. You need to actively engage your audience. Start a topical blog, ideally related to the investment idea that you will eventually propose. Post to different forums to gain credibility and attract new orbiters. Keep your content fresh and alive.
How does iCrowd help?
The Entrepreneur Ecosystem™ developed by iCrowd is based on our belief that for early-stage businesses to succeed and grow, they need money, advice, and networks. We foster this concept by providing a unique toolkit for entrepreneurs to gather funding, establish and strengthen networks, and get the advice and education needed for success. We will provide more in-depth reviews of these features in future blog posts as we near the launch of the Entrepreneur Ecosystem™.
Join the iCrowd today and be prepared for the launch of the transformative world of Investment Crowdfunding!