Equity investment crowdfunding has advanced beyond a unique way to fund projects. It is now considered by many to be a viable funding method with untapped potential. It is garnering attention both from new businesses as well as from established companies.
According to an article in Entrepreneur Magazine, “It has been a good year for crowdfunding. The Securities and Exchange Commission lifted the ban on general solicitation, meaning U.S. entrepreneurs can advertise publicly that they’re looking for investors. Research firm Massolution estimates that individuals have raised $5.1 billion on crowdfunding sites.”
Capital Raising Tool
Equity crowdfunding enables people to obtain capital, and utilizes the internet to sell stock. It wasn’t too long ago that this source of funding was not legal in the United States. The complex financial requirements for Initial Public Offerings, or IPOs, are beyond the reach of many start-up operations. This limited the start-ups to obtaining funds from those in their circle of personal relationships. Most entrepreneurs don’t know enough people to raise their desired level of capital. Equity investment crowdfunding provides a way to sell an idea to thousands of people that can see its benefits.
Many people in the investment industry agree that equity investment crowdfunding has only scratched the surface of its potential. Like any type of investing, it requires dealing with firms who are knowledgeable and have experience. Equity investment crowdfunding is currently evolving into a popular funding source for the finance, real estate, and technology industries, and is quickly becoming more popular than traditional funding methods for many entrepreneurs.
One of the most important aspects of equity investment crowdfunding is that someone is designated to follow up and make certain that all promises are kept. For example, should an independent film producer obtain funding and not move forward with filming his movie, it could lead to lawsuits from investors. Making serious mistakes with a crowdfunding project could lead to breaking securities laws and federal issues, so keeping apprised of all legal obligations is important.