Equity crowdfunding is presenting an opportunity for businesses to grow their market without putting all their cash and savings into investments. Existing hurdles that inhibit the ability of the average Black American to invest in African businesses have been eliminated. Now, Equity crowdfunding allows any American adult to invest in any business (including start-ups) with any small amount of money. This is a beautiful opportunity for the majority of African American to invest any amount, even $10 into African businesses and benefit from the economic boom of start-ups across Africa. The new methodology also permits consumer influencers to make contributions towards which business gets funding from investors.
To get started and receive funding for your business, an entrepreneur will have to sign up to an Equity crowdfunding platform such as SeedInvest, WeFunder, and among others. Once the platform commits to showcase the campaign of the entrepreneur, you will then have the opportunity to set some basic bars – such as minimum investments. Either you allow anyone to donate small figures and cumulatively achieve your target or you set a minimum – such as $300. Invest options available through equity crowdfunding include Simple Agreement for Future Equity, Convertible Note, Stock, Debt or Revenue Agreement, and Perks. Just like traditional investments, entrepreneurs have to share some ‘confidential’ information to build the credibility of their offerings to allow investors to arrive at a decision on their business. The process of Equity crowdfunding takes time to finally get the post running. This means that one has to question the release of information, associated risk, the time involved, and ensure that they are sure of the move they are making.
For investors, the game just got competitive as the number investors are outrageously huge due to Equity crowdfunding. Investors have to register with any of the platforms and once accepted, you can view all offerings and associated terms. There are national regulations which allow investors to invest just a percentage of their income into start-ups. As investments can be risky, the new platform is an opportunity to invest less and watch your money grow over the years. However, some of the investment options also provide short-term ROI.
In all, this is a beautiful opportunity to raise funds for your business as an entrepreneur and for the majority of people to invest. However, there is a high risk either ways and individuals need to assess the risk prior to pursuing it.