![](https://refinancegold.com/wp-content/uploads/2022/07/pexels-photo-259132-1000x600.jpeg)
Equity Crowdfunding Demystified – Part II
![](https://refinancegold.com/wp-content/uploads/2022/07/pexels-photo-259132-1000x600.jpeg)
With equity crowdfunding, you raise funds from private investors by offering unlisted shares in your company. This model is different from offering investors shares of a company listed in the stock exchange. You need to register with the SEC to participate in such equity-based fundraising. Offering shares in your business to would-be investors isn’t the only crowdfunding solution. There are ways to reward investors through crowdfunding platforms without giving up portions of your business.
Debt Crowdfunding
Debt crowdfunding is a hybrid solution between traditional crowdfunding and small business loans. With this business financing type, the loan is from a crowd instead of online lenders or financial institutions after signing a loan agreement. You repay the money borrowed with interest, over a number of months, as per agreement. No shares of your business are required for funding.
Donor Crowdfunding
Donor crowdfunding or donation-based crowdfunding, is a process involving people who contribute to a cause without expecting any returns. Friends and family members donate funds to support the dream of opening a new business. Non-profit organizations and charities prefer this crowdfunding mode to solicit donations from supporters to the cause. Some online platforms available for donation-based crowdfunding campaigns, are GoFundMe, CrowdRise and Fundly.
Rewards Crowdfunding
Crowdfunding which is rewards-based is a fundraising option appealing to entrepreneurs who avoid debt that needs to be repaid. Here contributions are taken from financial backers in lieu of benefits as a trade-off. The rewards offered to contributors can be as simple or complex like copies of books before publishing or a massage therapist rewards donations with gift certificates for future services. A trial and error process helps to find suitable rewards to motivate people to share and support your compelling vision. Some entrepreneurs offer an array of various rewards which could be of value to the donor for the amount the supporter or well-wisher contributes. This is a trial and error process!
Equity Crowdfunding Sites
As the SEC regulates and looks over equity crowdfunding, you have to utilize an SEC-mandated funding platform to solicit funds from the public in lieu of your company’s equity. Despite regulatory hurdles, a number of equity crowdfunding platforms are available. You review several sites to assess options that ensure the best fit. Some great equity crowd-funding sites are: CircleUp, Republic, WeFunder, Fundable, StartEngine, Netcapital, MicroVentures, Mainvest and SeedInvest
Pros and Cons of Equity Crowdfunding
Equity crowdfunding is a business funding solution if unable to access funds due to revenue limitations, credit issues, or lender requirements issues. Without debt to repay and interacting with numerous investors, you could raise more money. Business owners structure crowdfunding campaigns to retain more business equity and offer small portions to investors. You attract non-traditional investors to support business goals, gain visibility and build support before launching the business. You share a portion of the company’s future profits for cash injection now. As per SEC guidelines, you disclose the company’s financial details to every potential investor, online. The risk of public failure exists if your equity crowdfunding campaign bombs. Equity crowdfunding platforms charge fees and retain 5-15% as commission. Traditional investors refrain as it’s tough to resell shares of small companies without being financially hit. Crowdfunding campaigns are time-consuming, without any guarantee of securing funds to make the energy and time spent, worthwhile.
More in Uncategorized
-
`
Stunning Hotels Around the World Which Even Celebrities Fawn Over
Where do Celebs vacation? In certain aspects, superstars are similar to us, but not when it comes to vacation lodging. Stars...
December 1, 2023 -
`
Unlocking Financial Success: Timeless Wisdom from John Paul DeJoria
In a recent interview with Forbes, John Paul DeJoria, the visionary entrepreneur behind Paul Mitchell and Patrón Tequila, shared a wealth...
November 8, 2023 -
`
The Ultra Wealthy Want Their Privacy and They’ll Do Anything to Get It
Ultra-rich rapper Nicki Minaj in her pink Lamborghini worth $400,000 or celebrity entrepreneur Mark Cuban stepping out from his private jet worth $40...
October 31, 2023 -
`
How Celebrities Managed to Solve Their Financial Woes
Celebrities have lost billions and filed for bankruptcy while drowning in debt. If they can resolve their financial issues, then so...
September 8, 2023 -
`
Useful Real Estate Strategies at Various Stages of an Investing Career
There is no one perfect investing approach, as real estate investors are aware. At various phases of your investing career, investigate...
September 2, 2023 -
`
Do the Rich and Famous Celebs Have Secret Life Hacks? You Bet They Do!
You may apply lessons from your own life by studying the behaviours of those who have gained success and renown. Fame...
August 20, 2023 -
`
Debt Investments – What Are They?
Debt has always been a notion, and if someone owes a debt, they must also be the owner of that debt....
August 5, 2023 -
`
Inflation forces 38% of American Adults To Delay Major Purchases
Many American adults are delaying major milestones such as buying a house or buying a car due to inflation. 51% of...
July 28, 2023 -
`
What are the Rich Spending their Money on the Most? THIS!
Money waste is a rather personal matter. Personal finances are very private, and you are in charge of deciding how you...
July 16, 2023
You must be logged in to post a comment Login