A Simple Equity Crowdfunding Fundability Evaluation Tool Revisited

So … how can you quickly and simply evaluate if an equity crowdfunding raise may fly?

Meaning it will get investors.

After overseeing 320 unaccredited investor equity crowdfunding raises totalling $142 million you get a good feel of what gets funded and what doesn’t.

This is key to any successful equity crowdfunding platform. Having just one raise or a score of unfunded raises is not a good look.

To quickly assess fundability up front you need a framework.

Just over a year ago I wrote …

“What we can learn about Equity Crowdfunding “Title III” raises from other jurisdictions”

Title III still isn’t with us yet but unaccredited equity crowdfund investing is in a few countries with many more to follow.

In the article I used a variation of my fundability circles diagram. In the last year it has been updated considerably as I’ve been more involved with incubators and accelerators.

FundibilityCircles

 

 

 

 

 

 

 

 

 

Each of the circles reflects a strong success pillar.

  1. A Story told with clarity. It needs to be convincing, compelling and credible
  2. An enthusiastic, grounded Team. It needs to be a balanced (Steve Jobs and Steve Wozniak), passionate, capable and likeable Team.
  3. And Supporters who believe in what you are doing. There needs to be lots of suitable people to share the story with and engage with.

In addition it is at the intersection of the circles that a simple check reinforces the overiding strength of Story, Team and Supporters.

  • Relevance. The story being pitched needs to be relevant to the supporters of the product, the service, the technology, the team, the geography or for whatever reason they are “supporting”.
  • Capability. The team must be capable of implementing the story they are selling.
  • Credibility. The supporters need to see the team as credible and worthy of their trust.

You can work out your own scoring depending on the weight you put on each part but I usually rate the conversation or pitch out of 50 as follows …

FundabiltyCirclesScored

 

 

 

 

 

 

 

 

 

Only once have I had an entity that I straight up awarded 50 out of 50 and they subsequently raised they managed to get investors and get the funds they needed!

Happy evaluation.

My view?

Under 35 points suggest tell the team to go away and get stronger. You can easily show them on the venn diagram where they need to improve. Its a waste of everyone’s time and money to onboard those not credible enough yet.

This will be even more essential with Title III as Title II and Title IV raises are predominantly evaluated through accredited investor criteria which is usually figures based and fairly analytical.

How to use the Fundability Circles

  1. As you are being told the story or are being pitched listen for elements of Story, Team and Supporters.
  2. If you don’t get the info you need to get a representative score start asking the questions around the diagram.
  3. Once you have sufficient information fill in the scores and add them up.