Crowdfunding is a great alternative way to raise capital for your business. The general perception is that it requires a lot of work - which is somewhat true. If you spend some time putting together a detailed strategy, it will actually be easier than you think. So what should you do in order to make your crowdfunding life easier? Well I think we found a small hack ;)
Topics: How to Fund Your Business
When it comes to crowd investing, there are two main options: equity and debt. In equity-based crowdfunding, investors fund a business in exchange for equity - the ownership shares in the company. In this model, they usually get a return on their investment in a one-time payment and only when and if the business is acquired or goes public (‘has an exit’). Unfortunately, statistic shows, that only 1 out of 10 companies get acquired or go public, and there is always the chance that the value of purchased shares could fall below the original purchase price.
The new crowdfunding rules – Regulation Crowdfunding (Reg CF) – are celebrating 1 year anniversary of being in force on May 16th. The new rules open new opportunities for both sides. Business owners have an alternative to funding their companies from a bigger number of supporters. At the same time, all U.S. residents can finally invest in entrepreneurs they believe in.
The new crowdfunding rules (Title III of the JOBS Act) are going to celebrate 1 year anniversary of being in force. Regulation crowdfunding opened new opportunities for both individuals and businesses. It enables the crowd - so every US resident, to invest in startups and small businesses while participating in the financial return. The goal of the Act was to make it easier for entrepreneurs and business owners to access capital to grow their companies. At the same time, this created an equal opportunity for people, not the Wall Street and Silicon Valley bulls, to potentially create a secondary income. But the new rules seem to be creating further impact.
Crowdfunding is becoming a more popular way to fund a business. If before for the idea stage projects the options were pretty clear - either Kickstarter for more tech related products or Indiegogo for more artistic projects, today the number of crowdfunding options keep growing and evolving.
Although regulation crowdfunding under the newly approved Title III to the JOBS Act has only been possible for less than a year, already 100 campaigns have been launched. This number exceeded my estimations and I’m sure impressed many lawmakers on Capitol Hill who were initially doubtful about the potential of regulation crowdfunding. While not every campaign has been successful, the sheer amount of campaigns launched validates the need for this market.
Topics: Crowdfunding Trends
Today, the new crowdfunding rules enable every American to invest in small businesses and startups while getting a financial return - instead of a t-shirt or a product. One of the models gaining popularity is investing in companies in return for a share of their revenues. This is a perfect model for business owners who run local companies - like that cool coffee shop you work from every other day or that awesome artisan making the unique jewelry everyone compliments you on. The best part is that you need less money to start investing than traditional methods - investing as small as $200 could pay for a few extra cups of coffee in a few months.
A space movie filled with real, tangible hope and inspiration
Last Friday Startwise was thrilled to sponsor the Hidden Figures Cocktail Party and Screening. We are grateful to our partners Diversity.Capital and Women.VC for making this premiere celebration possible.
Among our guests were such supporters of diversity in finance and capital as Jayni Shah from Menlo Ventures, Nancy Pfund from DBLpartners, Anarghya Vardhana from Maveron, and of course, Jess Lee, the first female partner at Sequoia Capital in 40+ years.
While 2016 will certainly go down as one of the most important years ever in the history of crowdfunding, 2017 may be remembered as one of the most exciting. Obviously the passing of Title III to the US JOBS Act in May of this year will be a key milestone for the industry given that this new legislation allows, for the first time ever, non-accredited investors the opportunity to invest directly in the equity and debt of startups and small businesses. That means that 95% of the capital concentrated in the United States now has the legal right and access to invest directing into the businesses and startups in their communities. There is little the industry will likely ever do that will eclipse this monumental achievement but while the passage of this law is truly impressive, the real excitement is derived from the growth and achievements of the actual startups and small businesses that now have access to capital.
Topics: Crowdfunding Trends