Raising money for your startup isn’t easy! For years, venture capital and bank loans were the obvious go-to options. But today, more founders are looking beyond those traditional routes and turning to their own communities for support through investment crowdfunding.
In a recent webinar, our Director of Startup Banking, Rob Burnett, hosted a conversation with Jazz Parker of DNA (Digital Niche Agency), exploring how investment crowdfunding is opening new doors for startup founders. Together, they unpacked what founders need to know about this growing capital-raising strategy, the strategic advantages it offers over the traditional venture capital route, and how to use it effectively.
What Is Investment Crowdfunding?
Investment crowdfunding lets startups raise capital by selling shares directly to the public – often their customers, fans, and online followers. Instead of relying on a handful of big investors, founders can build a diverse base of smaller investors who are deeply invested in the company’s success.
“Think of it as turning your customers into owners,” Jazz said. “They’re financially invested in your success, and they become one of your best marketing engines.”
Rob added context by comparing equity crowdfunding to other common approaches:
- Bootstrapping: Self-funding growth through revenue or savings.
- Debt Financing: Borrowing capital, typically through loans.
- Equity Financing: Selling shares to accredited investors or VCs.
- Equity Crowdfunding: Selling shares to retail (non-accredited) investors through regulated online platforms.
“This is a great option for entrepreneurs who aren’t yet a fit for venture capital or bank financing,” Rob explained. “It’s a powerful way to validate your market while building community ownership.”
What Founders Need to Know Before Launching
While the barrier to entry is lower than VC, investment crowdfunding still requires serious prep. According to Jazz, success depends heavily on marketing and building an audience early.
“This is not Field of Dreams,” Jazz said. “You don’t just post a campaign and get funded. You need a plan to drive traffic and tell your story.”
Authenticity is key. Rob and Jazz agree that founder-led content, such as behind-the-scenes glimpses, honest stories, and product demos connects best.
“It doesn’t have to be polished,” Rob noted. “People don’t want a corporate ad; they want to see the person behind the brand.”
Jazz agreed: “Founders who share their journey, their values, their ups and downs – they build trust. That’s what converts followers into investors.”
Build Your Audience Before You Need It
One of the biggest mistakes founders make when launching a crowdfunding campaign is waiting too long to start engaging their audience. Just like preparing your financials or crafting your pitch, building a loyal following needs to happen well before you go live.
Ideally, founders should begin marketing 9 to 10 months before going live. That means showing up consistently on platforms like TikTok (Jazz’s top pick for organic reach), engaging early fans, and experimenting to see what resonates.
“If you wait until launch to start creating content, it’s already too late,” Rob cautioned.
They also touched on influencer marketing, advising founders not to lean too heavily on borrowed audiences. “You need to own your message,” Jazz said. “Otherwise, the attention you buy won’t convert.”
How Much Can You Raise?
Understanding the legal limits and requirements of different crowdfunding paths is critical to choosing the right strategy for your startup. The structure you choose, whether it’s Reg CF, Reg A+, or Reg D, will shape how much you can raise, what kind of investors you can bring in, and what kind of preparation and compliance is required. Planning ahead with this in mind allows founders to set realistic goals and allocate resources more effectively.
Jazz broke down the legal limits of various crowdfunding options:
- Reg CF (Regulation Crowdfunding): Raise up to $5 million/year from both accredited and non-accredited investors.
- Reg A+ (Mini IPO): Raise up to $75 million/year, with more regulatory requirements.
- Reg D: Raise unlimited capital from accredited investors only.
For Reg CF campaigns, founders need reviewed or audited financials depending on the raise size. They also typically use a Special Purpose Vehicle (SPV) to simplify the capitalization table.
Even with the right legal framework in place, executing a successful raise requires upfront investment, especially in marketing. Rob asked about budget expectations, and Jazz recommended founders allocate 10–25% of their target raise toward marketing efforts. Campaigns typically last 3 to 6 months and follow a three-phase arc:
- Pre-launch (2+ months): This phase is all about building your audience well before the campaign goes live. Founders should focus on growing awareness, engaging with early supporters, and creating meaningful connections that will form the foundation of their crowdfunding community.
- Live campaign: Once the campaign launches, it’s important to start strong and maintain momentum. Founders need to prepare for the “hard middle”, or the period where enthusiasm may dip. They must stay consistent with outreach and engagement to keep the campaign moving forward.
- Closing phase: During the closing phase, fundraising usually accelerates rapidly, creating a “hockey stick” curve. This increase is largely driven by fear of missing out (FOMO), as potential investors act quickly to avoid missing out before the deadline.
Raising capital through crowdfunding isn’t just about choosing the right regulation—it’s about building a strategy that aligns with your growth goals, resources, and audience. By understanding the rules, budgeting wisely, and committing to the full lifecycle of a campaign, founders can turn compliance and marketing into powerful tools for momentum. With the right preparation, your raise can be more than a funding event—it can be a brand-building moment that attracts long-term supporters and propels your startup forward.
Raising Capital Is Sales – Own It
The biggest takeaway from the webinar? Fundraising isn’t just about numbers—it’s about storytelling, relationship-building, and persistence. At its core, raising capital is a sales process. And like any good sales effort, it requires strategy, consistency, and confidence.
“You’re not just funding a company-you’re selling a vision,” Rob said. “Founders need to be comfortable pitching, closing, and asking for the investment.”
Jazz pointed out that some founders hesitate to act like salespeople. However, successful entrepreneurs embrace the grind. “Content. Ads. Conversations. You need to show up and do the reps,” he said. “Your 100th video will be way better than your first, but you have to start.”
In other words, fundraising isn’t a one-time ask—it’s an ongoing campaign. The more you practice and refine your pitch, the more natural and effective it becomes.
Why Grasshopper Cares
Rob closed the session by reminding founders: investment crowdfunding isn’t for everyone. But for those building early traction, it’s a powerful, viable path that requires grit, patience, and willingness to be uncomfortable.
“At Grasshopper, we want to help founders make informed decisions and access the right capital at the right time,” he said. “We’re not just a bank – we’re your partner in building something great.”
Stepping outside your comfort zone challenges you to learn new things, adapt, and develop skills you didn’t know you had. It’s part of the growth journey every founder faces, and it can be daunting. That’s why Grasshopper is committed to consistently showing up – not just as a bank, but as a partner who supports you through the growing pains and cheers you on every step of the way.
Keep the Momentum Going
The conversation doesn’t stop here! Whether you want to revisit key takeaways or explore the tools mentioned in more detail, we’ve got you covered. Access the full webinar recording on-demand or connect with Rob Burnett and Jazz Parker directly on LinkedIn. And don’t worry – more founder-focused webinars are on the way! If you’re not already a Grasshopper client, be sure to sign up for our newsletter so you never miss an update.
By Julia Larkin in Business BankingStartups
