Tokenization is great for attracting more investors with diverse profiles. Still, sometimes it leaves a business owner lots of questions. How exactly can such profiles be found and how to promote tokenized assets for novel types of investors?
Three groups of STO investors: how to choose right?
The first and foremost thing to understand is your offerings' target audience, which should be defined according to the risk-return profile, investment horizon, and other metrics.
Correct targeting determines whether or not the advertisements will be effective and whether you'll find a community that is genuinely interested in supporting your business. Almost any company has an average investor audience that would like to invest, but it may be difficult to determine it.
Well-tuned targeting allows you to find those investors and, as a result, makes marketing conversion rates higher as your messages are more compelling. Moreover, competition in investor acquisition channels will be way lower than if you competed for a wider audience. Thanks to this, the marketing campaign will be more efficient and cheaper.
There are dozens of investor segmentation frameworks. To make it simple, let's talk about the three broadest groups of them.
1. Institutional investors. These can be family offices, pension funds, private equity firms or venture funds. For institutional investors, the benefits of crypto investing lie in two factors. Firstly, such assets are very liquid so it's easy to make an exit and manage the portfolio overall. Secondly, they can achieve high returns by using these assets in DeFi protocols.
If the notion of Decentralized Finance is new to you, read our article "How does DeFi unleash the potential of tokenized securities?" to find out what exciting opportunities these technologies open for tokenized securities.
Different institutional investors specialize in investing in various types of companies, so it's better to select investors according to their preferences, which are usually known and displayed on their websites and investor aggregators. Some funds prefer to work with real estate, and some of them would instead invest in startups.
2. Individual investors. In the last few years, a new colossal pool of capital became available to private corporations. Previously, most individuals could not invest outside stock markets in non-traded companies, but they entered the game thanks to tokenization and fractional ownership. You can divide them by interests and demographic characteristics to discover those who will find the risk-return profile of a given investment the most attractive.
3. Crypto-investors. They are used to investing in crypto-assets and are not likely to start working with traditional assets. What they also need, though, are asset classes not as volatile as most cryptocurrencies to save money earned by speculations and risky investments. Real-world assets in the form of tokens are suitable for this type of investor to secure their money.
Ways you can reach out to your potential investors
There are two broad groups of tools you can use to reach out to your potential investors. The first group are the instruments of digital marketing.
Marketing channels that may allow promoting your STO to the investors
1. Paid advertising. Paid ads are seen by people on social media or while googling a request related to your company's field of business. For example, a search engine request "invest in real estate" can be an excellent space for placing an ad. It's also possible to buy promotions on websites featuring content about investing.
2. Promotion in social media. The absolute majority of today's investors are active social media users. In addition, social media giants possess data about your target audiences' geography or interests, which is a significant advantage in making a target promotion. Many equity crowdfunding campaigns, for instance, use Facebook as one of their key means of reaching out to their audience.
3. Promotion via influencers. When it comes to making a decision, people trust bloggers they are subscribed to and opinion leaders. Negotiating paid advertising with such public figures could also be a great tool to promote your token insofar. Influencers comply with rules of promoting securities: informing their audience that they are paid for the promotion and giving all the necessary disclaimers.
Reaching out to investors directly
Direct outreach is the second group of methods. While digital marketing is efficient for reaching out to individual and crypto investors, direct outreach is better applied to seeking institutional investors, high net worth individuals or angel investors. In its essence, direct outreach is about reaching out to potential investors directly via LinkedIn or email and sending them the details of your offering.
You can implement this tactic in two ways. First of all, you can make a list of potential investors yourself using services such as Crunchbase or Angellist. As an alternative, you can use providers with their own networks of accredited investors. Those are, for example, brokers focused on promoting securities or investors' associations. Institutions like these unite investors interested in particular industries.
What techniques can make your business marketing plan more effective?
There are several common tactics that can increase businesses' attractiveness and improve the marketing campaign's efficiency.
Firstly, a clear explanation of how exactly the potential investment will generate its return is a must. Many good offerings don't eventually acquire investors because their stories aren't sufficiently based on data. Another typical problem is that stories are not clear enough. Investors require a precise understanding of how they will get their profit, what your business model is, and, among many other things, how you are going to use their money. If you want to learn more about which financial metrics matter to investors, see our video "How investors assess your corporate finance. Private placement, equity crowdfunding, IPO, STO" on that topic.
The second tactic is to stimulate social sharing. Companies whose messages are spread over social media enjoy much lower marketing costs; users are basically doing marketing instead of you. To do that, a company needs a story worthy of sharing, emotional and compelling. Simply being a deal good enough for investors to share with each other is also an option. Also, you can provide a direct incentive by rewarding investors for sharing your messages. In the latter case, the rules for influencers apply as well.
If your offering is not attractive by itself, you need to give investors additional preferences that will decrease their risk or increase return. You may provide a higher coupon, reduce the price per token or provide liquidation preference. You can learn more about this in our article "Conventional clauses in venture agreements and why you should choose tokenization instead".
Lastly, it's essential to create liquidity. Investors prefer assets that are easy to sell or trade so that they can get money back at any moment ― frankly, this is one of the reasons you need to tokenize. Tokenized assets are way easier to trade, which makes them more attractive to investors.