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The criteria that I found most valuable when making my decisions were the following: What is the size of the investor community invested in other offerings on the platform to-date? Does the platform accept investments via credit card? For example, about 40% of my crowdfunding investors invested with a credit card. Does the platform allow for campaign extensions (if you fall short of your goal within your campaign period, can you extend the campaign until you reach your goal)? I’ve extended my campaigns multiple times. Does the platform allow for multiple disbursements? I prefer to disburse money from my campaign once a month. However, many platforms don’t allow you to disburse the funds until after the campaign is over What are the fees? Platforms can charge between 5-20% of your raise as fees, with some platforms having complicated fee structures that involve taking some of your Securities as part of the offering. Some platforms require you to pay them cash upfront before launching an offering. Does the platform allow you to set your own terms? For example, some platforms don’t allow you to sell convertible notes. Some others don’t allow you to sell non-voting common stock. Some platforms insist that they set the valuation for your startup in order to launch—the logic being that they know their investors, and they want to provide them with a “good deal.” For many reasons, you want to sell the Security that’s right for your startup. Does the platform allow you to have design freedom on the campaign page? You want to make sure that your brand is well represented. The aesthetics and optimization of the page are highly correlated with conversion (how many people invest after visiting your page). Does the platform support analytics? You need advanced analytics to market your offering. Some platforms, for example, allow you to enter a Facebook Pixel and Google Analytics code into the campaign page, while others do not. Does the platform have a good reputation? You will be driving a lot of potential investors and media folks to this platform, and you want to be sure that your platform of choice hasn’t been involved in anything shady in the past. Does the platform allow you to update your investors and prospective investors with campaign notifications? Some platforms have a built-in functionality where you can post updates right on the campaign, download email, and mailing contact lists of your investors (allowing you to contact them by email and allowing you to build Facebook “lookalike audiences”). Whereas, other platforms don’t even share the email addresses of the folks who have already invested in your startup. Does the platform support or plan to support secondary trading for the Securities that it sells on its platform? Will your investors be able to sell the Securities that they buy from you? The ability to sell Securities in a marketplace brings a lot of liquidity and increases its value significantly. In order to allow for secondary trading, the platform needs to obtain an Alternative Trading System (ATS) approval from FINRA.
Michael Burtov (The Evergreen Startup: The Entrepreneur's Playbook For Everything From Venture Capital To Equity Crowdfunding)
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