Crowdfunding is revolutionizing and disrupting the traditional capital raising and investing industries. Crowdfunding essentially eliminates the middleman increasing returns for both the investor and the issuer of the deals. Through the power of the internet, companies have access to investors worldwide and investors have access to investments previously only available to a select few.
(1) Investor prohibition is over! Crowdfunding provides new access to capital. It is now legal to market your own raise directly to any potential investor via online or traditional means. There are now several different new capital raising structures that groups raising capital can choose from, Reg D, Reg A+, Reg CF, and Intrastate to name a few.
(2) The cost of capital. From seed round to IPO, you can now crowdfund all of it. Go from seed round to public for a fraction of the traditional costs, and effort. Crowdfunding provides access to capital at a lower cost than traditional funding methods such as an IPO, broker-dealer, or even from the banking sector. By eliminating the need for the VCs, Banks, and even Broker-Dealers, companies now have more options to raise capital than ever.
(3) Crowdfunding is the ultimate form of control and diversification. Since you have access to investors from across the country or worldwide, you are not dependent on a specific region that may be in an economic downturn. As banks tighten lending policies and capital becomes harder and more expensive to raise, financing your projects from the crowd becomes even more attractive. Private enterprise is the backbone of most economies. Crowdfunding enables businesses large and small to raise the capital they need to expand and grow on their own terms, with or without permission from banks, VCs, and other entities or groups.
(4) In a business to retail environment, crowdfunding not only gives more access to capital but can also increase your customer base since the crowd will not only finance your project but are, or usually become customers of your product. With a vested interest in your firm’s success, it is typical for the crowd to spread the word about your product or service among their friends and family, thus becoming brand ambassadors. Crowdfunding is not only a tool for raising capital but also a great strategic marketing tool.
(5) White label technology now allows users to showcase their deal, solidify their compliance to the applicable laws and guidelines they are using, streamline and automate the investor process, and manage the investor’s post raise, all via an online experience. Investors can even use their mobile devices to access, make, and track his/her investments.
As the industry leader, CrowdEngine™ provides off the shelf crowdfunding solutions branded and configured as your own. The CrowdEngine™ platform is rebranded with your own designs, logos, fonts, and color palettes and custom theme if you so desire. CrowdEngine™ also manages the software, hardware, security, compliance, feature updates, support, and strategy on an ongoing basis so you can concentrate on growing your business.
By Alexandra Bruner & Brent Brague
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