Setting up a business takes capital. Expanding an existing business takes capital. There are a number of ways for you to find capital for your business, but you need to think about which one is the right option for you. Each option has its pros and cons, but one option that more businesses are turning to is equity crowdfunding. Equity fundraising has a number of benefits over traditional funding, and these cannot be dismissed.
It’s always a good idea for any product or service to have validation as soon as possible. This is as true for a startup company offering a new product as it is for an established business expanding their product range. Equity crowdfunding is a good way to see how valid your product or service actually is. It allows entrepreneurs to assess if the product is something consumers actually want, or if it’s something the entrepreneur just thinks they want. Using equity fundraising shows the product to a wide range of potential investors, and potential consumers, and can test if the demand is there. A successful crowdfunding raise can also show potential future venture capitalist investors that the business is valid, encouraging future investment.
Another benefit is that many potential investors will want to test the product, or service when they do their due diligence. This can give you valuable feedback on your business model, your growth plan, and exit plans.
Equity crowdfunding also gives you a chance to market your business to a new, fresh audience. Also, investors on the platform can provide word of mouth advertising whenever they discuss their investments increasing your brand awareness. Established businesses also benefit from this as crowdfunding raises their company profile, and enables them to reach a wider audience with markets they may not have accessed before.
When you put your business on a crowdfunding platform, and people invest in it, you’re changing the relationship. The person is no longer simply a consumer, they are also a stakeholder. They have a vested interest in seeing your business succeed. This can lead to brand ambassadors, who actively promote your business to other potential customers.
Equity fundraising offers you the opportunity to reach a wider range of investors. The crowd of investors can include Angel investors, venture capitalists, family offices, people with a high net worth, and average, every day people with some disposable income.
Equity crowdfunding platforms can also help you secure and anchor investor, which can, in turn, encourage other investors to come forward.
Another massive benefit of equity crowdfunding is that you continue to get support from many of the platforms, and investors. In fact, many platforms have found that their alumni businesses, who have had a successful raise, will return to access further capital, either with an entirely new group of investors, or their existing investors.
Also, some platforms will offer you help and support. For example, The Right Crowd will ask you to submit your business plan, assess it, and offer you support and guidance if any improvements are needed. They help you take the next steps to secure the funding you need to expand, and take your business to new heights.