What is Equity Crowdfunding and How Does it Help Start-Up Companies?
Equity crowdfunding is a relatively new investing option that has been created as an alternative to investing in high-risk stocks. In equity crowdfunding, you don’t buy shares of the company, but rather invest in the business by buying a piece of its future profits. Equity crowdfunding can be very beneficial for startups because they will have access to a wider pool of investors and more money than if they were reliant on private investing alone. We’ll take a look at how equity crowdfunding works and why it is good for start-up companies in this article.
Investing through equity crowdfunding has many advantages over traditional venture capital investing both for entrepreneurs looking for funding and everyday investors interested in getting high returns on their investments by putting small amounts at risk with each investment opportunity.
One of the best things about investing in a startup company through equity crowdfunding is that you have complete transparency into how your money will be used. You can see exactly where it goes, which gives you peace of mind knowing that your investment isn’t going to waste.
Another great thing about investing in a startup with equity crowdfunding instead of investing directly from the bank or somewhere else is being able to get high returns for small investments. In general, if an investor invests $1000-$5000 per deal, they can expect their ROI (return on investment) anywhere from 0% up to 200%. In other words, investors stand a good chance of investing in the next big thing, making a lot of money with just one deal.
By investing this way, you can also get stock options that are typically only available to company insiders. This means when your investment pays off and grows exponentially, so do those stock options!
The investing process is also very streamlined with equity crowdfunding. You can invest directly from your bank account and for as little as $100 per deal. There are no fees whatsoever if you invest through a crowdfunding platform that uses the new JOBS Act investing laws.
All in all, equity crowdfunding is worth looking into for both entrepreneurs seeking funding and everyday investors who want to make more money on small investments with high returns.
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