John Auckland, from crowdfunding communications agency, TribeFirst shares the 5 reasons he believes Christmas is a great time for crowdfunding.
You might wonder why anyone would want to crowdfund over the Christmas-New Year period – after all, people will be enjoying themselves and will be slowed down by turkey, mince pies, chocolates, late nights etc.
However, reviewing the crowdfunding data programme, TAB, the data shows that December was the most funded month in the crowdfunding sector in 2017. In total, £123m was pledged across 199 campaigns.
Why is this?
1. Investors have time on their hands
Investors have more free time in December. Pre-Internet, the investment community would shut down over the summer months and Christmas, but that’s simply not true anymore.
2. Pre-Christmas bonuses
Bonuses are paid at many different times of the year, but Christmas is the most common. Bankers typically get their bonuses in January, so that’s typically considered a more liquid month for traditional investing. However, crowdfunding appeals to retail investors; ‘everyday’ people who are far more likely to get a bonus before they finish work for the year.
3. Pressure to close funding rounds
Many entrepreneurs want to close their funding round before the end of the year – they hustle harder so they’re not campaigning over the holidays. Given the amount of liquidity there seems to be over the Christmas period, I would take advantage of this and plan activity for the week between Christmas and New Year – a time where many of investors will be browsing, but fewer entrepreneurs will be active online.
4. Allowances to be utilised
Many people use the Christmas break to file their tax return before the end of January deadline. This can be when investors realise how much EIS (Enterprise Investment Scheme) tax relief allowance they have left to use. Many investors will invest as much as their income tax relief allows them to!
5. It’s all psychological
An article in Psychology Today discusses how stock markets often experience the “holiday effect”, which causes them to be more optimistic about the state of the market due to their
mood. A study by George Marrett and AC Worthington concluded that investors are more likely to be in a buying state of mind due to “high spirits” and “holiday euphoria”.
So, what does this mean for unlisted private companies raising funds through crowdfunding?
I would argue their investors are just as likely to experience the holiday effect. In fact, given the highly risky nature of early stage startup investing, I would further argue that the holiday effect is even more pronounced – it might encourage an investor to express greater risk appetite than they would normally do. This is excellent news for companies that are campaigning alongside the festivities.
Get family buyin!
It may be surprising but Christmas isn’t such a bad time to run your crowdfunding campaign. As running a campaign is pretty much all-consuming nature, I suggest you get your family’s buyin before holidays begin. You will find yourself distracted from important family time. However, there are benefits to be gained in the long-run.
John Auckland is a crowdfunding specialist and founder of TribeFirst, a global equity crowdfunding communications agency that has helped raise in excess of £14m for over 45 companies on platforms such as Crowdcube, Seedrs, and Seedinvest – with a greater than 90% success rate.
TribeFirst is the world's first dedicated marketing communications agency to support equity crowdfunding campaigns. John is also Virgin StartUp's crowdfunding trainer and consultant, helping them to run branded workshops, webinars and programmes on crowdfunding.
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