Did you know that the most common fear for starting a business is money? In fact, the top five reasons that keep entrepreneurs from successfully starting their own businesses include money, lack of knowledge or expertise in business management, unknown competitive factors, the fear of failure, and time.
It is likely that none of these risks come as a shock. However, one of these fears and risks can be alleviated with the help of crowdfunding.
For any aspiring entrepreneurs or relatively new startups, you may have heard about crowfunding, as well as some negative feedback pertaining to its validity and overall effectiveness. For example, the controversy is that crowdfunding may be considered general solicitation. However, some crowdfunding services are designed to assist small business startups and entrepreneurs by assisting with several forms of funding sources.
Some crowdfunding sources include:
Small businesses and aspiring entrepreneurs also have the option to work with an investing firm to take advantage of crowdfunding services and debt and equity financing options. This is typically done by investing in public funds via various equity crowdfunding portals. In fact, this approach is highly recommended for startup entrepreneurs and businesses looking to obtain capital because it spans the investing opportunities across multiple channels, optimizing a firm’s likelihood of obtaining startup capital funding and building a stronger crowdfunding portfolio. All this is accomplished with 100% liquidity through the public markets, giving private shareholders a way to further mitigate their investment risk.
Another reason why the idea of crowdfunding comes along with a negative name is the element of risk involved for most investors. When a firm makes the decision to invest in a new venture, or idea, it may be years before the investor sees any return…if ever. In fact, investing in crowdfunded startups and small businesses is one of the riskiest investments any investor would ever pursue. This in itself is one of the major problems with most current crowdfunding investment models.
Public-trading stock has proven to be a highly effective crowdfunding approach. Not only is it effective for startups and entrepreneurs, it is also a legitimate crowdfunding source that uses existing resources to assist small businesses and entrepreneurs with startup capital and equity. Furthermore, as mentioned above briefly, public-trading stock as a crowdfunding and equity source is also significantly less risky than some other crowdfunding options. This is because multiple sources are used across various crowdfunding channels, therefore, the overall risk is reduced.
With Crowdfundraiser, we use publicly traded equity to invest in private, crowdfunded businesses for both institutional and individual investors, which has proven to be a highly successful strategy for investors. With our current investment model, both investors and businesses can win.