Since the introduction of it in the year of 2016, equity crowdfunding has been flaunting a lot of buzz in the market. And why wouldn’t it? After all, it can help a corporation launch a brand new venture, grow the same quickly, and ensure a stable development accordingly.
However, as the topic is still quite new, there has been a lot of confusion surrounding it. Thus, today, we’ve decided to break down some of them through this blog thoroughly. We hope it‘ll be enough for you to come up with the right decision for your investment purpose.
Equity Crowdfunding Myths Debunked!
Before we get started with debunking the myths, let’s learn more about the topic itself.
Equity crowdfunding is a technique of raising your business capital only in order to develop a company accordingly. In return for offering cash, an investor will get equity ownership of the company – almost like buying a share. However, this proceeding can only be done online.
So, you’ve got the gist, right?
Okay, then, let’s move on to the myths that’s been plaguing the market and decipher them in a proper manner. Hopefully, you will get to learn even more about the topic along the way.
Myth – 1: Equity Crowdfunding is Only Ideal for Small Rounds.
Truth: When it comes to equity crowdfunding, most people think that it can only help them raise a few hundred dollars as a whole. However, that’s not true.
If you know how to pitch and get the right investor for your purpose, you can easily get more than one million USD from here. So, you can literally create your company from scratch.
However, here’s the thing.
When investing, most people keep an eye on the growth potential of a business. Therefore, if you can’t offer any information on that, you might not get the capital you are looking for.
Myth – 2: You Will Have to Deal with Too Many Investors.
Truth: Yes, having 50 investors and dealing with them every possible day can be a hassle. If you have a small organization, it will be even more difficult for everyone else.
However, if you are opting for a professional equity crowdfunding platform, you’ll be the one in control. So, you will be able to choose whatever investor you want to work with.
Trust me, even if you work with a single person, it won’t be impossible for you to get the cash you want. All you need to do is choose the right individual for the job – that’s all.
Myth – 3: Everyone Will be Able to See Your Proprietary Details.
Truth: Almost every online platform has their own private deal room that will enable you to determine and approve what information you want to showcase. If you want, you can also ask the website to restrict some data from your investor as long as you’re not allowing it.
In addition to this, before you let someone in your profile, you can also check the background of a person accordingly. This way, you will know if they are safe for your business or not.
Furthermore, it’s also possible to check Investor Data for Equity Crowdfunding from there. It, in turn, can help you choose the right person for the job.
Myth – 4: It’s Not Right to Seek Funding Online.
Truth: The world of online funding can be trickier than you may think.
After all, if you are not careful enough, you may end up getting into a scam system altogether. However, in most cases, the websites offering equity crowdfunding are regulated by someone in the governing chair. Hence, the issue of scamming won’t be too much of an issue here.
Also, even if you get into a scam, you’ll still retrieve whatever you have lost by requesting to the website. However, it might take some time to get completed. So, keep your chin up.
Myth – 5: You Can Only Go Online If You Can’t Get Anything Offline.
Truth: Not true.
If you want, you can both raise your capital through an online and an offline mean. There’s no need to create a channel between your funding options. In case you feel like you are more into offline funding because you feel safer, so be it.
However, even if you go for an online equity crowdfunding website, you won’t get scammed or anything. These websites are safe and reliable. However, still before you choose something it’s important to learn as much as you can about the platform.
Myth – 6: It’s Only for a Consumer-Focused Company.
Truth: When thinking about choosing equity crowdfunding, most people think that it’s only viable for consumer-focused industries, like e-commerce, electronics, etc.
However it’s not true. In reality, the online platforms available out there are focused on almost each and every industry available out there. So even if you are serving a SaaS-based company you can still partake in the same.
Nonetheless, before you opt for someone, it will be important for you to let the investor know how you are planning to grow your business.
The better they know your organization, the more they will be interested in investing in you.
The Final Say!
Apart from these, many people also think that equity crowdfunding can be expensive. And, if you are operating an SME, it will be nearly impossible for you to afford it.
Nevertheless, it’s not true at all.
When it comes to providing a share of your company, you will be able to negotiate with your investor about it properly. And, if you are not on the same page, you can simply avoid them as a whole. There’s no pressure or anything related to it.
In any case, that’ll be all for this article. Hopefully, we’ve answered your queries properly. If you are interested to know more about it, please comment below.
