EQUITY CROWDFUNDING

Accelerate your business with these expert tips on Equity Crowdfunding - take a look and discover this TIP!

So-called EQUITY crowdfunding or online investment platforms make it possible to find additional funding in the early stages of a company in exchange for capital or products and services on favourable terms. Crowdfunding is the contributions of money from different people to finance a project through a specific platform. This method facilitates investment as it does not require a very large amount of capital and the target capital is divided among several individuals.

Within this category we find the so-called Equity Crowdfunding. The concept is the same, but is taken a step further. With the equity method, a company is also financed collectively, but this time by means of the purchase of shares in it and subscription to a capital increase. Investors therefore become owners of the company and will therefore be able to exercise the rights associated with this status, such as the right to share in the company's profits. Generally, The companies that resort to this form of financing are consolidated companies with a certain amount of growth.

SELECT AN EQUITY CROWFUNDING GUARANTEE

Coordinating with the platform team to manage your investors and shape the campaign is essential, so you must demand quality from the platform. The transparency is a crucial value in these cases where large sums of money are moved in collective operations, therefore, tomake sure that the platform offers support and guarantees to both the investor and the entrepreneur. The National Securities Market Commission (CNMV) (CNMV) plays a decisive role in the regulation and legality of alternative financing platforms, establishing rules of conduct. It seeks to ensure that the Equity platform is focused on your type of project and rely on third party references and platform achievements; The project is based on its metrics, the considerable number of projects already financed, a high minimum ticket and a large investor database.

Equity crowdfunding is a form of financing in which a company issues shares in exchange for capital from investors seeking to obtain an ownership stake in the company. Unlike reward crowdfunding, where investors receive a reward or product in return for their investment, in equity crowdfunding, investors receive shares in the company. Equity crowdfunding has gained popularity in recent years as an alternative form of financing for start-ups. Crowdfunding platforms, such as Kickstarter, Indiegogo and Crowdcube, allow companies to publish information about their business, describe their growth plans and raise capital from a broad investor base. Companies can set a funding target and a timeframe for reaching it, and investors can invest any amount of money.

Investors in equity crowdfunding are often private investors or small investors seeking high-risk, high-reward investment opportunities. By investing in a company through equity crowdfunding, investors have the opportunity to gain an ownership stake in the company and share in the success of the company if it succeeds. However, they also run the risk of losing their investment if the company fails. For start-ups, equity crowdfunding can be an effective way to raise capital without having to borrow or dilute their existing shareholding. They can also gain support and visibility from a broad investor base. However, companies must be prepared to comply with disclosure and regulatory compliance requirements, and must be careful in setting the terms of the deal to ensure that investors are protected and that the company receives adequate funding.

In short, equity crowdfunding is a form of financing in which a company issues shares in exchange for capital from investors seeking to obtain an ownership stake in the company. It is important for companies and investors to understand the risks and benefits of equity crowdfunding before participating in it.

Advice for entrepreneurs seeking equity crowdfunding financing

If you are considering equity crowdfunding as an option to finance your start-up.

HERE ARE SOME TIPS THAT CAN HELP YOU SUCCEED:

1. Prepare carefully: Make sure you have a solid planning and presentation for your business before you start a crowdfunding campaign. This may include preparing a detailed business plan, a marketing plan and a convincing presentation. You should also be prepared to answer questions from potential investors.
2. Set a realistic funding target: set a funding target that is realistic and reflects the needs of your business. Don't set too high a target that may be difficult to reach, but don't set too low a target that will not provide you with the necessary capital.
3. It offers an attractive valuation: offer an attractive valuation for your company that is reasonable and reflects the company's growth potential. Offering a valuation that is too high may deter investors, while offering a valuation that is too low may make investors feel that your company is not worth investing in.
4. Communicate with your investors: Maintain good communication with investors during and after the crowdfunding campaign. Make sure you keep investors informed about the progress of the company and respond quickly to any questions or concerns they may have.
5. Complies with regulations and standards: Make sure you comply with applicable crowdfunding rules and regulations, including disclosure and financial reporting. Work with a lawyer to ensure that you comply with all rules and regulations.
6. Maintain a professional attitude: Make sure you maintain a professional attitude throughout the crowdfunding process. This includes being transparent and honest in the information you provide to investors, and being respectful and polite in all communications with them.

In summary, equity crowdfunding can be an effective way to finance your start-up. However, it is important that you prepare carefully, set a realistic funding target, offer an attractive valuation, communicate with your investors, comply with regulations and standards, and maintain a professional attitude. If you do it right, equity crowdfunding can be an effective way to raise capital and build relationships with a committed investor base.

Advice to investors wishing to participate in startups through equity crowdfunding

If you are considering investing in startups through equity crowdfunding.

HERE ARE SOME TIPS THAT CAN HELP YOU MAKE INFORMED DECISIONS:

1. Do thorough research: Before investing in a startup, be sure to research it carefully. This may include reviewing its business plan, examining its financials, and understanding its business model and target market. Also, it is important to review the crowdfunding platform on which the startup is raising capital to ensure that it complies with applicable rules and regulations.
2. Understand the risks: Investing in startups through equity crowdfunding carries significant risks, including the risk of total loss of the investment. Understand the risks before you invest and make sure you are willing and able to accept them.
3. Diversify your investments: Diversification is key in any investment portfolio, including investing in startups through equity crowdfunding. Invest in a variety of startups and sectors to reduce risk.
4. Set realistic expectations: Emerging startups have high growth potential, but they also face uncertainties and challenges. Set realistic expectations about the return on your investment and understand that success is not guaranteed.
5. Consider the time horizon: Investing in startups through equity crowdfunding is a long-term investment. Consider your time horizon and make sure you are willing to maintain your investment for several years before you see a return.
6. Consult a financial advisor: talk to a financial advisor before investing in startups through equity crowdfunding. A financial advisor can help you assess the risks and rewards of investing and make informed decisions.

In summary, investing in startups through equity crowdfunding can be an exciting and potentially lucrative way to invest. However, it is important to research startups carefully, understand the risks, diversify your investments, set realistic expectations, consider the time horizon and consult with a financial advisor. With these tips, you can make informed decisions and reduce the risks associated with investing in startups through equity crowdfunding.