21 Apr Building Equity Crowdfunding into Your Business Finance Plan
As equity crowdfunding continues to rise to the surface, more and more entrepreneurs and investors are beginning to see its effects and the impact it can have on small business finance.
One of the major benefits to crowdfunding in any form is that it has the potential to benefit both entrepreneurs and investors alike, when planned accordingly, of course. Various portals, channels, and mediums exist where entrepreneurs and startups can seek support and funding coupled with the power of the Internet that not only maximizes investment opportunities but establishes long-term connections.
How Does it All Work?
Most investors are aware that private crowdfunded stock is high risk. Additionally, individual investors lack the purchase power to reach across various channels and market sectors to find the best investment.
So how exactly does equity crowdfunding work? Equity crowdfunding solves two common problems: lack of liquidity and risk concentration for both entrepreneurs and investors. In order to address these two risks, a robust equity crowdfunding methodology and theory must be developed and applied.
Where Should I Start?
Strategize. So where does an entrepreneur begin? Start by creating an equity crowdfunding strategy. What is your methodology? How does that tie into your overall entrepreneurial mission, objectives, and goals? What is the time frame surrounding your strategy? Are your financial goals for one year, three years or five years?
Get into investors’ minds. Next, begin drafting your strategy, and find a platform. How do you plan to reach out to investors within your market? It’s important to consider how an investor thinks. How does your plan address their risks? What information can you provide them? What is your plan of reciprocity?
Design and diversify. Once you have strategized and considered stakeholders’ expectations, then you can begin the design phase of your equity crowdfunding plan. How will you execute your design? One way to reach a large pool of investors is by diversifying. Why stick to one particular niche market? Entrepreneurs will likely see a larger response and maximize their opportunities for investors by extending their target reach across multiple mediums and market sectors.
What Are the Benefits?
Before you begin the development and design phases of your equity crowdfunding strategy, you might consider the benefits. By working with a professional crowdfunding firm, entrepreneurs can reap the following benefits from participating in an equity crowdfunding program. Some of the benefits include:
- Access to thousands of active accredited investors
- Investor targeting for finding the right investment partner
- Active private and public promotion partners for getting your deal in front of more people, more quickly
- Outsourced campaign management, providing you the freedom to work on the business, not the financing
Contact an equity crowdfunding expert to find out how equity crowdfunding can benefit you and your business and how you can maximize your investment opportunities today.