Take
Paying 8% in ads to raise money beats Wall Street's 8-12% fee
The Chosen's director was upset that about $800K of the $11M raise went to advertising. Harmon's view is that this is a normal cost of capital: Wall Street would charge 8-12% to raise the money, and the ad spend also built awareness for the show.
“And I was like, well, how do you think we built Poo-Pourri and Squatty Potty? We spent money. And if you had gone to Wall Street and asked them to raise you money, they would charge you 12%, right? They'd charge you 8 to 12%. So we're actually right in that world, but we're just having to buy ads, which is getting you awareness on your project.”
Steal thisJudge the ad spend on a crowdfund as cost of capital and compare it with what a bank or underwriter would charge.
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