As it becomes easier to gain capital through equity crowdfunding campaigns, the number of startups relying on crowdfunding to raise funds and grow their business continues to rise. We’ve put together a list of the top 10 benefits of equity crowdfunding.
- Provides access to capital. New regulations under the JOBS Act make it easier than ever to raise money for your startup without relying on a bank. Equity crowdfunding allows you to find accredited investors who are interested in your venture and have the funds to back it.
- Minimizes risk. Crowdfunding relies on a large pool of investors who invest at lower levels, minimizing overall risk.
- Raises more than just money for your startup. Your investors quickly become a group of people dedicated to making your venture successful. Entrepreneurs can rely on their crowd of investors for feedback, comments and ideas, which often helps during the early stages of a venture.
- Builds a network of investors for the future. As your venture moves forward, your investors from your crowdfunding campaign are still involved – and they’re more likely to invest in future ventures.
- Acts as a marketing tool that increases organic visits to your platform. Crowdfunding introduces a venture to the market. By incorporating social media and digital marketing, crowdfunding provides an easy way to direct traffic to your site. Crowdfunding campaigns are easy to share, which makes it easier for your investors to spread the word to their connections.
- Gains credibility with proof of concept. A successful equity crowdfunding campaign can give your venture credibility when approaching angel investors. A crowdfunding campaign’s success shows other investors that your venture has sufficient market validation.
- Introduces prospective customers to your venture and pre-sells your concept. With an equity crowdfunding campaign, your investors become your early-adopters. As you pre-sell your concept, gain insight into user reactions and analyze the market, you’ll be able to adjust your business plan or plan for growth as needed.
- Offers simplicity compared to other forms of investing. In many ways, equity crowdfunding is easier than traditional forms of capital investing. Entrepreneurs simply choose the right crowdfunding platform and then use it to spread their message to potential investors.
- Generates free media exposure. A successful crowdfunding campaign is newsworthy, which attracts media attention. Crowdfunding is a unique industry and can help pick up widespread media coverage, especially as your campaign gains momentum.
- Provides access beyond the banks. Crowdfunding is relatively affordable, making it accessible for most startups and entrepreneurs. Many crowdfunding platforms charge nothing to start your campaign, and only take a small percentage of your funds if the campaign is successful.
Equity crowdfunding has obvious benefits for entrepreneurs looking to jumpstart their venture and raise capital. Enventys Partners can help.