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Chapters:
- How to Attract Potential Investors
- Where to Run Your Advertising Outreach
- Marketing Through Social Media
- Email Marketing
- Investment Offering Page
- Investment Payment Methods
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The content in this webinar is not and shall not be construed as investment advice. This information is meant to be informative and for general purposes only.
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Rod Turner
Rod Turner is the founder and CEO of Manhattan Street Capital, the #1 Growth Capital service for mature startups and mid-sized companies to raise capital using Regulation A+. Turner has played a key role in building successful companies including Symantec/Norton (SYMC), Ashton Tate, MicroPort, Knowledge Adventure, and more. He is an experienced investor who has built a Venture Capital business (Irvine Ventures) and has made angel and mezzanine investments in companies such as Bloom, Amyris (AMRS), Ask Jeeves, and eASIC.
www.ManhattanStreetCapital.com
Manhattan Street Capital, 5694 Mission Center Rd, Suite 602-468, San Diego, CA 92108.
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Now I'm moving into marketing. So in a Reg s you are allowed to call your friends, you're allowed to meet them, you're allowed to present to them verbally, personally. You are allowed to do general solicitation online outside the us you are not allowed to solicit to US investors specifically. You are not allowed to do that. The SEC does not want you or you with our help or doesn't want us to be tempting US investors who are not accredited to pretend to be non-US people in order to invest in your company, right? So we have to make sure we don't cross that line. But otherwise, international solicitation to legitimate markets is entirely, entirely allowed. It's almost always gonna be social media. Of course, you can use email if you have great lists of friends, associates contacts.
Generally cold emailing does not work. But there are some exceptions. I mean, we're working with a very savvy email startup company, early stage company where they are using chat GPT judiciously and they have vertically integrated, so they don't depend on things like MailChimp. And they're using intelligent methods to do cold solicitation via email, which works. So it can be very cost effective when it's done well. But my god, have I seen a lot of failed efforts to do this? Renting lists and buying lists generally does not work. This is the only exception that I've seen in nine and a half years since I launched this company.
Social media platforms do vary depending on the country, of course. So that's a key part of the outreach. And therefore we need one or more marketing agencies that are able to execute with, with skill in country. And which depends on the countries, depends on the markets that we're targeting. Ongoing emails to the prospects that we've, we've accumulated a prospect list. So imagine this scenario. Somebody's in their social media stream or they receive an email and makes them interested enough to come to the offering page. And if they like it enough to stick around, they may click on the learn more or the invest now button to check it out further. If they do that, they have to at least give us their email in order for them, for us to know who they are so we can follow up via email to promote the offering to them.
So now we have a growing prospect funnel, and the cost of acquisition of those leads is something very early stage, which we can measure that, you know, that window of cost matters greatly because it is, it's an indicator of how effective the, the outreach is, right? If it's too expensive, we know it isn't working right away. We don't have to spend the ages figuring that out. We need to change it right away. So advertising, email outreach, and then frankly, you, you, you know, we set up an automated sequence of emails like four or five emails that goes out to every new prospect and a carefully timed sequence. But in addition, weekly email updates to add flesh to the bone, to build credibility, ideally with the spokesperson, which will normally be the CEO speaking on camera 45 second to an 92nd type videos with an update in a very open kimono style. You know, in order to engage and tr and build trust with the audience. We don't want to be just selling, we want to have an open kimono style where you come across as human, you come across as real and genuine.
So those types of over time, as we go further into the offering, those emails become the primary source of investment because we, we are constantly bringing in investors in there. There's constantly a percentage of them that are investing online, but emailing to this prospect list, gaining their, their trust, notifying them about a share price up increase that's coming soon, those kinds of activities cause a lot of, of conversion. Of course, the offering page has to be compelling. You know, we might have two or three variations of the offering pay page in the early weeks, early, even longer. It could be we, we could per, we could perpetually have two versions of the offering page with one set of ads bringing in an audience for this version and another set of ads bringing in an audience for the other version where the lead messaging on each page is different. Of course, the total content is always there, but the lead messaging needs to resonate with the advertising. So it's possible to have multiple landing pages with the same backend investment flow, and that can work very well when, when it's appropriate, it's appropriate.
People can typically, internationally, you know, you can't use bank transfer easily, that we don't have a CH potential outside the us So credit card, debit card and wire transfer are the primary investment vehicles, very rare exceptions to that. But these days, you know, when we're marketing to the right audiences, they're using their smartphones to invest, right? Sixty five, seventy, seventy 5% of the money will actually be invested on a smartphone these days. Didn't used to be that way, you know, years ago. But now it is that way. And debit credit card is the easiest way for those investors to invest. Costs, So the front end costs in a Reg s are generally lower than in the other types of offerings. As I touched on earlier on, probably the lowest cost of entry for a good PPM for a Reg S is gonna be about $10,000, unless you already have one that you already built for some similar purpose, in which case repurposing it will cost less, it can cost more.
You know, you can make it unbelievably complicated and comprehensive, then it'll cost more. You know, it could be 30 K, but 10 K is reasonable marketing set up. 25 to 30 5K is reasonable depending on the specifics of which agency. And so, so the total and the total front loaded expenses, you don't need audited financials to do a reg s as in a Reg D, you don't need audited financials. But the total front loading cost may be in the 50 to 70 5K range. That's realistic. I was talking to a company late last week that's pretty compelling actually, and they've been raising money in a reg D via direct means, and they're exploring doing it online with, with us. And I like the company. It's a pretty compelling company. It has a lot of potential. So in their case, they already have a PPM, it's well drafted, you know, so the editing of that is gonna be quick and very inexpensive. That's good. Helps save time. Still, the messaging and marketing stuff needs to be created though.
So actually the biggest issue I haven't touched on yet, which is the cost of, of conversion, right? What's the cost of converting prospective investors into actual investors? So this varies greatly. And of course it varies greatly by country. You know, going out internationally, you know, there are countries where the level of sophistication of the audience is not there yet, where they're ready to invest online. You know, we've done we have a thing called Manhattan Street Fund, lp, a venture fund, which we use to invest in companies from time to time. And we did interesting tests, marketing it internationally for a while, and we were getting amazing engagement from people, but they would be asking us to email them the package or mail them the package because they weren't comfortable with actually investing online. So obviously that's a factor, right? And it does change with time.
The maturity. This, the online comfort of investors in different countries is developing at a different schedule. So countries like the uk, Germany, Scandinavia, you know, Norway, Switzer, Sweden, Denmark Australia, CA, Canada, when it's appropriate and Dubai, those are sweet spots. But then of course, where you have a presence will be a big factor also. Good that you're putting questions in. Well done guys. Keep that up. I'll get to them shortly. How are we doing on time? How are we doing well? Yeah, so marketing efficiency, going back to that, that's a difficult one. It's really important. So at this stage, I, I haven't done enough, we haven't done enough pure reg guesses that I can just rattle off numbers and give you, you know, hard facts as to what exactly it's gonna be. And of course, it isn't exact at any time, right?
Your company's different than the other companies anyway. But in the early days, we will get traction, we'll get early engagement, we'll get early investments in a Reg s because people don't have to be wealthy to invest people. The people who engage online in an offering have to be optimists, let's face it, right? Especially if they're looking at a com. A company that is outside of their country, they can't touch and feel it, they're not really likely to pay you a visit. So they're optimists by nature, they're usually male. But nevertheless, even though, you know, we have a lot of experience with plus investment activity, and again, we're dealing with mostly male audiences and they're optimists, otherwise, they wouldn't even be considering investing online in a company. But having said that, though, the proclivity, the likelihood that they will invest in an online company offering varies by country, et cetera, et cetera.
So what does this all mean? It says to me that I would expect that in the first month you might spend $10,000 in advertising and you might raise 10 or 20,000 or $30,000 in investments in the first month. No guarantees that that will happen. But in a properly prepared offering that is appealing, that passes muster based on the other things I've described. That's a reasonable expectation. Ho horribly inefficient of course, but that's why you don't spend a lot of money in the first month. And as we get the targeting and the advertising in the ai in the social media platforms in this country and in many countries, Facebook and Instagram are really very efficient vehicles. When we can get it to work, when we can get into TikTok, it's by far the most cost efficient vehicle. But again, it, it depends by on, on which country we're in, there are different platforms that excel in in different countries.
But long-winded way of getting to the point, which is that we need to, we, we strive to get the efficiency as high as possible. So if we can get the advertising cost, the pure media spend down to below $10 per hundred raised, then we should feel good because that is difficult to achieve. And if we get to that, we should feel good. Of course, we want to get it lower. We worked with a biotech company in a reg a plus context a while ago where the ad agency was happy. And frankly, the company was pretty happy because the cost of advertising was about eight and a half dollars, $9 per a hundred dollars raise. It wasn't bad, it was pretty good, but I felt that we could up the ante by doing more video ads and the agency was reluctant. So I asked the company to back me up in this, which they did, and then the agency reluctantly came around and did video ads and they ended up the one particular eight second animated ad getting the cost down to $3 and 30 cents per hundred raised with that single ad.
That was absolutely stunningly efficient. Of course, I didn't know which ad was gonna do best. I didn't know how much efficiency we could gain, but I was pushing to do so, and the results were phenomenal. So that's just the, the nature of the beast, right? It's all about execution, creativity up in the ante. Mid max, there's, you can have as you know, a zero minimum, which is to say you can set the offering up such that if you raise $10, you could do an escrow close, why would you? But you know, you don't have to have a high minimum investment amount unless you are buying, if you are raising money in order to buy a company or a building, if the price is $10 million, then you have to have a $10 million escrow closing amount, right? But in a grow the company strategy, which is what most people are doing then you can be drawing down an escrow week one, week two, et cetera.
And no maximum, there is no absolute maximum amount you can raise in a Reg s the only thing you have to deal with is the numeric count of investors, which I touched on earlier and the logistics of that. But actually, you know, most companies who go into these online raises are very nervous about having lots and lots of investors. But actually my experience has been that lots of investors is a very good thing and most investors are not expecting to have a CEO discussion once a month, once a week, et cetera. Most of the main street investors putting in modest, you know, smaller amounts very easy to deal with. And really you end up delegating most all of that to the transfer agent. If you are paying out dividends or profit distributions, you can do that through the transfer agent too, by the way.
So to simplify to simplify life from an operational standpoint, one thing that does matter in any of these online raises, but especially in reg S and in reg a plus, is to have a low per investment minimum. So, and, and it depends on the country. If we're raising money, you know, if, if the Philippines was a big target, I haven't recently checked the numbers, but the average income's a lot lower, GDP per capita is a lot lower. So if you were to set a minimum of a thousand dollars, that would put off most investors, right? In the Philippines, maybe a hundred dollars would be a smart number or $200 in the, in the Philippines, if you go to Germany, France less, less so France go to Germany, the uk, Scandinavia, Australia, less price sensitivity. But you know, bear that in mind, the per the point here is that if you think of this, the, the psychology, somebody's doing something else, they're in their social media stream, they're not thinking about your company, they're doing something else, they see a compelling ad, they click on it, they come to the offering page.
It's interesting enough to gain and re reten, keep their interest. Now they're looking to see, they're thinking about investing. We're converting them from unaware and un uninterested to interested enough to stick around. If you present them with a high investment minimum, like something that feels like five or 10 K to them feels like that amount of money to them at this stage, it's casual. If you have such a high number, they're gonna go away and not come back. We need to have a low enough minimum that they'll stay interested and stick around. Think about that. Psychology. Yeah, the typical rate, typically what happens in these online raises is that people will start an investment, maybe complete it with a relatively modest sum, and then they'll stay engaged and they'll up the ante and they may come in with their retirement account with a la much larger number four months down the road.
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