Investing in Start-ups has seen many riveting changes in the recent years. From only elite group investing in them to crowdfunding startups things have taken quite paced track. Initially crowdfunding startups had a very little limelight to share but now it is seen as a major form of financial backup for startups. Now, the financial regulators have even framed laws and acts exclusively for crowdfunding startups. However, a lot of options for capital call are still present today. These include angel investors, venture capitals, bank loan, but either they need connections or have stringent procedures. Hence more and more entrepreneurs are slating their way to crowdfunding startups.
Who can invest?
The past ways of investing in start-ups, gave rise to a term ‘accredited investor.’ It happened to be a person who had an annual income above certain specified limit. Now the scenario has cleared the barriers of annual income and given opportunity of all class of people to invest in crowdfunding startups, no matter what they earn. However, in the interest of general public rules have been framed to cap the maximum investment by a normal investor. This saves the investor from getting doomed if the start-up fails to stand up.
Entrepreneurs looking forward to crowdfunding start-ups
For small business owners, gathering funds from the crowd could lead to more than one million bucks collection annually. However, point to consider here is the disclosure of these finances, which is an important but tedious job involved in the process of crowdfunding startups. For the US, the Securities and Exchange Commission has relieved budding businesses which collect less than 100 thousand dollars annually of the audit process.
The proceedings for crowdfunding start-ups
So, till now it is clear that crowdfunding startups could give your business the extra edge, but what is the window to garner money from the crowd. One cannot go advertising door to door for potential investors. Easy way to kick start crowdfunding startups are brokerage firms which often do the process online and are known as crowdfunding startups platforms. These platforms abide by the latest government rules and laws and do the ledger making for their clients. Well known crowdfunding startups platform include Kickstarter, MyEfunder and Indiegogo.
The 3R’s for investors while crowdfunding start-ups
The investors often tread between 3R’ which are Rewards, Risk and Returns while investing in a start-up. The chances of start-up being a success could not be ever estimated with surety; also the associated awards could be equity in some cases which connects you directly with the success of the start-up. Hence, from the success of many venture capitalist and angel investors one lesson could be certainly learnt that investment should not be confined to a single start-up. Risks involved in early stage businesses are more; hence their concept should be well researched.
The aura of crowdfunding startups has spread far and wide such that even VC’s and Angel Investors are keeping a track of project ideas which gain more of public attention.
