Equity Crowdfunding: Grow Your Business with Nontraditional Financing
So, you have a genius business idea, market need and community following, but are lacking in one area: funding. You’ve been denied loans from banks and venture capitalists. You are NOT alone. Banks have been decreasing the amount and frequency of their loans to small businesses over the past 30 years. That’s why Equity Crowdfunding is huge for small businesses; it opens the door to a whole new capital source: nearly 250 million citizens!
What is Equity Crowdfunding?
Equity Crowdfunding, also referred to as investment crowdfunding or crowdinvesting, allows everyday consumers to invest in early-stage, private companies in exchange for equity in that company. Title III of the JOBS Act was passed in May of 2012 and came to fruitition May of 2016 making equity crowdfunding legal. Prior to that, only accredited investors (very rich) could invest in small businesses. Equity Crowdfunding is a new, exciting and engaging way to get the funding you need to make your business a success.
Businesses That Can Raise Funds Through Equity Crowdfunding
Private companies based in the U.S. can raise funds through Equity Crowdfunding. Businesses that already have a community presence and intend to utilize that presence to raise funds and engage their audience are often more successful in Equity Crowdfunding efforts.
How Does Equity Crowdfunding Work?
All raises need to take place on a Regulation Crowdfunding platform like Fundopolis. Businesses can raise up to $1,070,000 in a 12-month period. If a larger investment is needed, you can have multiple raises in increments over several years. Platforms charge a percentage of funds raised and some charge additional payment processing fees.
Why You Should Consider Equity Crowdfunding for Your Business
Not only can you raise the funds needed to grow your business, but you remain in control. You’re not held accountable by a bank or “higher power”; you answer to yourself and your investors. As the business owner, you set your terms. You determine the amount of equity you want to offer and the price per share. Rather than making payments toward a business loan, you’re giving equity in your business to your customers. What will make customers feel more invested in your business than actually investing in it?
Don’t let a lack of funding set your business back, join the Equity Crowdfunding community now! What’s stopping you?