5 reasons to use equity crowdfunding to raise capital for your startup12-Jun-2016
Equity crowdfunding (ECF) is a game-changing alternative finance model that enables startups and SMEs to efficiently raise equity finance from a broad and diversified group of investors. ECF platforms provide entrepreneurs with the technology and know-how to access untapped pools of capital so that they can remain focused on product development and growth.
However, an equity crowdfunding campaign can offer so much more than just access to capital. Here are the top five reasons why entrepreneurs should use equity crowdfunding to raise capital for their startup or SME.
1: Efficient access to expansion capital
Anyone who has attempted to raise expansion capital for their business knows that it is a very difficult and lengthy process. By bringing the SME private equity investment process online and making more accessible and efficient for investors of nearly all profiles, equity crowdfunding makes the fundraising process quicker and more efficient and streamlined for entrepreneurs.
2: Strategic investors
A common misconception is that equity crowdfunding does not attract “smart money”. In reality, investors from across the spectrum of financial sophistication are using ECF platforms to source deal flow. Included in this are seasoned angel and prominent institutional investors -- the kind of investors who can open doors and offer strategic guidance.
3: Customer buy-ins and brand ambassadorship
ECF platforms offer startups and SMEs the unique opportunity to enable their customers to become shareholders. There is perhaps no better way to cement customer loyalty than to have your customers literally own a part of the business? Similar to this, is the brand ambassadorship that an ECF campaign creates. Once investors become shareholders in your business, they will be incentivised to promote it wherever they go.
4: International market expansion
ECF platforms are becoming increasingly globalised. For example, Eureeca currently has investors from 36 countries. By raising capital from such an international pool of investors entrepreneurs acan lay the foundations for or directly result in expansion to new markets.
5: Marketing and PR
Equity crowdfunding, alternative finance, and fintech are becoming popular topics in the media so a successful campaign can generate good media coverage and marketing exposure.
An equity crowdfunding campaign offers a number of opportunities to grow your business, aside from the obvious raising of funds. It’s speed, efficiency, and reach are powerful tools for growth-oriented startups and SMEs.
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