Three Reasons to Consider Equity-Based Crowdfunding for Your Startup Company


Most beginning entrepreneurs do not find themselves in a situation where the money they need to start their business is readily available. In fact, the opposite is true, with many entrepreneurs struggling even to acquire the necessary funding to create a prototype.

For these small scale, low budget entrepreneurs, equity-based crowdfunding serves as a viable solution. Equity-based crowdfunding is a relatively new concept in funding that allows average individuals to invest in startup companies, becoming shareholders in the process while also providing the necessary funding to start the business.

There are several reasons why equity-based crowdfunding is attractive to the entrepreneur. It can be the ideal platform to raise the money needed and receive the assistance required at startup for the business to become successful.

Provides Funding Outside of Traditional Lenders and Investors

Through equity-based crowdfunding platforms, there is no need to go to a traditional lender for a lump sum of funds. Since there are thousands of smaller investors, it is easier for entrepreneurs to receive funding for their company. On the other hand, it is more difficult to acquire loans from larger companies such as banks or venture capital firms; therefore, crowdfunding offers a more feasible solution to raising capital for your company.

Creates Interested Parties Leading to Business Success

Once people are committed to the company as investors, they become motivated to make the company succeed. This allows the entrepreneur to make these individuals more involved in the company’s operation. They can assist with the promotion of the product or service, the company’s movement into new markets, and other related aspects of growing the company.

Generates Online Traction

Social and internet media campaigns are often critical to the success of equity-based crowdfunding strategies. This creates traction among viewers that promotes your company’s image, and may thus help you gain investors.

Promoting one’s business through the internet drives interest in investing, particularly if the product or service offered is unique and easily identified as filling an essential need in the market.

For more information on crowdfunding and how it can help you raise the funds you need to launch your startup company, call Colonial Stock Transfer at 801-355-5740.

Eric Mellmer
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