For early-stage startups, a few things are more important than capital. Startups can work on market conditions, deliver marketing that attracts buyers and fine-tune their product with insights about customer behavior. Still, to create a well-rounded product for the market, they need access to capital.
The Need for Capital for Startups and How They Traditionally Acquired it
Startups need capital to get through the initial barriers to entry, ideate and develop a standout product and make changes to their product or team based on pivots.
Traditionally, startups had four main options to acquire capital:
And yet, there are entrepreneurs who’d not qualify for any of these for varied reasons. For them, an option is becoming rapidly popular- equity crowdfunding.
The Newer Avenue: Equity Crowdfunding
In essence, equity crowdfunding makes it possible for businesses in the U.S. to acquire funds from unaccredited investors. Three developments led to the equity crowdfunding of today:
We’re still on the bleeding edge of the potential of equity crowdfunding for startup founders and investors. Yet, investments of over hundreds of millions of dollars in U.S. startups confirm that this mode of fundraising is here to stay.
Top Equity Crowdfunding Companies
The U.S. equity crowdfunding market is dominated by these three companies today.
WeFunder has been a strong campaigner for the JOBS Act and is now at the forefront of equity crowdfunding.
Startups can sign up on WeFunder with no fees until they raise capital. That means you can focus on marketing your business without being bogged down by paying out for the opportunity to do so.
StartEngine houses a growing community of 300,000 investors, making it a lucrative place to get noticed by investors.
The company supports you every step of the way with a full-service plan and keeps you in the driver’s seat. You’re in control of tailoring your offer to suit business needs with StartEngine.
Republic markets itself as a company that can do more than helping you raise capital. With a growing community of 350,000 investors, it promises to create true fans and supporters for your business.
Republic reminds you that receiving capital is only one-half of the game, besides gaining market exposure and is quick to highlight that.
A Few Facts About Equity Crowdfunding
Here are a few things to know about equity crowdfunding-
Common Myths Around Equity Crowdfunding
Finally, let’s bust a few common myths about equity crowdfunding.
ConclusionEquity crowdfunding can be the way you decide to raise capital for your startup, not as a last resort but as a choice.
Talk to us at KiwiTech to learn more about the various options available to you and receive consultation from experts on the right way for capital acquisition for you and the path thereafter.