Do you have a great business idea you want to get off the ground? Is your company ready to jump to the next stage of growth? Do you want to launch a new product or service line? If you answered yes to any of the above questions, congratulations!
These are all stages when it’s common for business owners to realize they will need an influx of cash to make their dream possible. Equity crowdfunding is one of the fastest growing methods for raising capital but is it a good fit for your company or business idea? Answer the questions below and see for yourself.
Do you have a plan?
The importance of having a solid business model or plan cannot be overstated. There are different types of business plans and methods for developing them. Regardless of which direction you go, the plan should include the items below:
- Company description
- Market analysis
- Organization and management
- Service or product line
- Marketing and sales
- Target market(s)
- Funding request
- Financial projections
Are you prepared to not own 100% of your company?
Equity crowdfunding is not like “traditional” crowdfunding where investors are donating an amount of money for a prize or a discounted rate for the product. With equity crowdfunding, investors get to own a percentage of your company in exchange for the money they are putting into your business. As the business owner, you can determine the amount of equity you are willing to give away to investors. For example, you can choose to allow investors to own 15% of your company and you retain 85% ownership. Understand though that there is a direct correlation between the amount of money invested and the percentage of ownership. Usually, the more money you are asking for, the more of your company you will have to let go to shareholders.
Are you ready for the accountability?
As we mentioned before, you will have shareholders. These are the investors who have given you their money and now own a percentage of your company. This means you could have a group of people you need to communicate with on various topics including how the company is performing. If you want complete autonomy and the idea of being answerable to a group of shareholders is not appealing to you, then equity crowdfunding may not be a good fit for you.
Are you ready to participate?
Companies like Crowdfunder provide a platform for you to connect with investors, but this is not a “build it and they will come” scenario. To have a successful, public, equity crowdfunding campaign, you must be willing to be an active participant in the process of building and maintaining momentum. A plan for marketing your campaign and getting it in front of investors is a must. An effective campaign includes but is not limited to the following:
- Create a dynamic company profile on the platform
- Fill out the investment profile
- Tell your story! Investors often want more than just numbers to invest in they want to invest in you. Connect with them by sharing your story
- Leverage social media like Facebook, Twitter, LinkedIn, etc., to raise awareness of your public fundraising campaign
- Actively follow up with interested investors
Equity crowdfunding is not a good fit for every company, but if you answered yes to the questions above then come check out or platform! We’re excited to get hear your story and work with you to get your dream funded.