Individuals looking for funds to launch their businesses or startups today, mostly opt for crowdfunding with equity.
People from various different industries are turning towards crowd funding to get funded. This has resulted in immense growth of the same.
Types of Crowdfunding
Crowdfunding is further categorized into several types. The basic four types of crowdfunding include: equity-
crowdfunding, reward-based crowdfunding, debt-based crowdfunding and donation-based crowdfunding. Crowdfunding with equity is the most popular of all.
It is very different from the other types. Investors fund businesses In crowd funding with equity. They get some stake in the company in return. It is often subjected to several laws and regulations due to association with shares and stakes.
How crowdfunding with equity is different from others?
JOBS Act enacted in the year 2012, has created many opportunities for crowd funding with equity. Crowdfunding with equity basically involves investors who contribute to a business or startup. These businesses provide a share in their business in return for the investment made. Investors can greatly benefit from crowdfunding with equity. They can make small yet steady investments. Investors are also surely benefited as the startup grows.
#It is better than the old age methods
Startups now have a better alternative in the form of crowdfunding with equity. Rather than the traditional methods like taking a loan.
#It is fair to all
Initially, only wealthy people could invest in businesses. But many small investors have emerged with the advent of crowdfunding with equity. Even people with an average salary can now invest in a company and get its stakes.
#You can save some money on tax!
Crowd funding with equity even gives some tax relaxation in some countries.
Some cautions to think about!
There are many risks involved in crowd funding with equity. It is really important to analyze them thoroughly.
#Stay cautious about the amount.
First of all, the amount to be invested should be wisely chosen. Only the amount which can be risked by an investor should be contributed in crowd funding with equity. Because it has an equal probability of success as well as failure.
#Planning is the key!
Creating an efficient plan before launching the campaign is a very important step. Since this step decides the success of a campaign in crowdfunding with equity.
#Right platform means right path
Choosing the right platform for the campaign is also very essential. This increases the visibility of the campaign.
#You need to set the audience
Fixing your target audience in advance is extremely crucially. When crowdfunding with equity, you have to work in a specified manner. You have to do it by keeping in mind you target audience.
Though crowdfunding with equity involves certain risks, it can prove to be very beneficial if done properly.
