Your CRM is your most valuable fundraising asset.
Jeff Wenzel compares three fundraising paths: paid ads, cold outreach, and building a targeted investor community in a CRM. Paid ads and mass outbound are expensive and operationally messy. A CRM focused on long-tail investor relationships costs less and gives you data ownership for future rounds.
All right, so you think about doing a raise, there's really two options for you to get funding. One is going to be a paid ad strategy. Second is going to be a mechanism to just do a ton of outbound messages and we'll go through some of those costs. Or the third option, and this is what we've built, is going to be building a community of really targeted people into your CRM system so that you can continue to build a relationship with them. Right? Which takes more time. And the reason we do number three in our world is because, one, we want to think about multiple raises, we want to think about community building. We want to make these people potentially become part of maybe the company, not just investing, but partnerships. So we just want to be incredibly targeted as to who we're bringing into this ecosystem. Now, we're going to break down two things here around cost, right? So let's first do Facebook ads. So let's say you are like, all right, I want to run Facebook ads. I want to. We're going to just, just look at the budgeting, not the creative. So whatever you see here in the number, and then we spit this out. You also have to think, what are we making? Videos, images? So we've got, you know, you've got a creative designer making some piece of content or using AI, whatever it is. So let's say your monthly investment goal is you want to do a hundred thousand dollars, right? Let's say your average investment size is 700, which is the average, by the way, for equity crowdfunding. Let's say your cost per 1000 impressions is that. Let's say your click through rate is that. And your cost per acquisition is probably going to be somewhere around 300 bucks, let's say. All right, so to raise 100, we're spending $42,000, $43,000, give or take. We need this many clicks to get this many sales at this average, right? And where. This is where you should kind of think about putting your budget. And that's going to be your conversion rate right there. Now, this is no guarantee. This is just working out just the math. So you start to see like, all right, well, maybe my average investment size is 1,000. Maybe this got down to 225. Okay? You know, you still need 22,000. So you just got to make sure that you have that amount of budget to be spending because you can't stock the machine once it starts. So you really need to have this type of budget to get enough traction through the page. And even at this, let's say 22,000. We'll do some quick math here. All right, so let's go 22,500 divided by 30. So that's 750 a day, right? So sometimes when I tell people you gotta be spending between 500 to a thousand bucks, you know, here's the math, right? So you start to see that this is really expensive. And this also requires that you have an account that's established that Facebook would even let you spend this amount of money. So you've got to build up that relation like that partnership with Facebook or Meta so that they allow you to even spend this type of money. Or you're going to be working with a third party company. Let's say you're on StartEngine. Problem on that is that you need to keep this data. If you're spending this amount of money on a raise, you know, month after month after, you know, 25 grand a month on ads, and you run a campaign for five, six months, you want to make sure you're walking away with that data, not the marketplace that you're using. StartEngine, we funder, et cetera. So if they put their pixel on and not yours, that means they're taking the data off of your ad spend dollars. Not only that, if you are working on a, on a platform like that, if they're marketing their deal to your investors, you paid their marketing cost. Right. Why are we doing that? Right. So this is ads number one. But you just have to be really careful because if you start seeing the numbers like this, you know, Right. I mean, what are we doing here, guys? You know, you're on, you're barely a 1 return on ad spend. So the numbers can get very quickly. And then on top of this, we have to have amazing creative and especially in the new Facebook ad strategy they have set up now too, you gotta make sure that you're having very different creative across multiple verticals. Right. So you can't have just like seven ads saying the same thing. Right. So again, lots going on here. Let's flip to the second version here. Let's say you just want to build a massive outbound system to, you know, with email, LinkedIn, you know, mailboxes, basically a cold strategy just blasting investors through email. Okay, let's put the same numbers in here. You want to do 100,000. Okay, let's say this is your, your reply rate is 7. You have four emails in the sequence replying to meetings here. So we need, I mean these you can just see. And we need this Be averaging, like to be doing this, you got to be averaging like a $25,000, right? So, you know, but more than likely, let's put these back more. We're going to be more realistic here. So see, you got that. You're probably doing six. Your reply rate's going to be more here, meetings to close. I mean, that number is ridiculous. Let's get these more realistic here, right? So if you build this system to do a hundred thousand, you would need 1700 mailboxes, your infrastructure costs. This is going to be domains, warming them all up, inbox placement tools. All right, we'll just get rid of the labor costs for right now. Just, just to, you know. So if you were to build out this machine, which mind you, this would be a massive build to have that many mailboxes. And you also need a database of 116,000 investors. And you needed to be doing 324 meetings per month, right? So let's look at this. That's 10 meetings a day, Saturdays and Sundays. Your monthly nut to do this, 35,000, 36,000. That might get you a 2.8. You know, now maybe you're averaging $15,000 investors if you're going to do this. But again, in equity crowdfunding, you're looking for accredited investors only. There is no way that you can get down to, down to this, right? If you start, you know, let's say you're getting a thousand, fifteen hundred dollars, you're. Doesn't make sense, right? We're not, not even in the ballpark. So you have to be averaging. So you, now you come back and you go, all right, man, like what? We can't be doing this. These numbers don't make any sense, right? It's just not sustainable. I mean, you'd have to have a massive sales team. You need a database that you got to go pay for that. This is not counting paying for contacts, because where are those contacts coming from? And you know, just the amount of mailboxes like you're sending per month. 340,000 emails per month. So these are a couple of strategies. Like this is a. You're looking at the cold outbound, just blasting people with emails. Got the paid ads, right? You know, this is a two. If you're looking at this number right Here, this is a 2 return on ad spend. You put a dollar in, you're getting $2 out. But you got to have this budget per month. So this is why when you come back and you go, all right, well what did pre. What did we build. What did I build? You know, for pre IPO hype and invest Guru. You know, it's trying to get investors into the database, into your CRM, and hitting them with newsletters and emails and webinars. Right? So, you know, our visual. This, this is our, this is our visual that we, we think about here. Right? So we're putting these people in. We're using. We have a. We have invest really good investor data. We're trying to find people that invested last week. We've got accredited investors, you know, so we're trying to hit them as tight as possible with as much volume as possible while still making it cost effective. And that's, that's a tough, tough challenge. And that's why expectations have to be changed when working with us, because we're looking at the long tail of all of this. We're looking at your core business. We just have a different strategy than just saying, let's spend $50,000 a month and maybe we, maybe we bring in a hundred. Right. Again, there's no guarantees on that. And that would be. That's a big nut. So. All right, hope this all helps. Just kind of put into perspective cost and then looking at how we build and what our, what our mindset is. So hopefully this all helps. If you guys have questions, go to pre. Ipohype. Com, go to my calendar, book a time with me. I'd love to learn more about what you're working on and see if we can't build out a system to build your community, build your CRM, build your investor database for not just this deal, but all the deals that you have coming forward. Thanks.
