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  1. #1
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    Equity Crowdfunding: Benefits and Where to Start

    Equity Crowdfunding - Revolutionizing Startup Funding
    https://www.youtube.com/watch?v=1ONx...ature=youtu.be

  2. #2
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    It takes a lot more that this video. However, that is the basics and so, it is quite helpful. Especially for novice.

  3. #3
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    On an equity funding platform the investment opportunity is listed at a specific valuation, and investors choose to purchase equity on those terms...or not.

    On most platforms the valuation is self-determined by the entrepreneur. On others, it is negotiated with the platform. And on still others it is negotiated offline with a lead investor, who may then have a 'syndicate' following with additional capital.

  4. #4
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    General Benefits: There are many benefits of equity crowdfunding. It has taken a spin on traditional venture capital and made such investments more readily available. Additionally, equity crowdfunding opens the door to a larger investor base in the previously segmented and opaque angel investing and venture capital investing markets. This creates the opportunity for potentially superior returns, but with a higher degree of risk than many other forms of investing.

    Traditionally, private investing, whether it is angel investing or venture capital investing has been very opaque and segmented. Equity crowdfunding has changed and can continue to change that by bringing clarity and streamlining the process. While fees have dropped for investment in public securities in previous years, the fees for investment in the private side of the market have not changed and tend to be among the most expensive of all the financial services. Equity crowdfunding also has been changing that dynamic and likely will continue to do so. 1 Online systems have made the launch to close process much easier, faster, and cheaper.

    Benefits to Entrepreneurs: Due to the fact that companies seeking equity crowdfunding are generally young, they often have trouble securing bank lending. However, if a company is able to get listed for financing, a greater degree of access to funding is available. Investors from essentially anywhere are able to invest capital into companies listed for equity crowdfunding. This not only benefits investors by having access to more opportunities, but it also benefits the entrepreneurs who have access to a larger pool of investors who may view the business concept as viable and contribute capital to it in hopes of a potentially profitable investment. 2

    Equity crowdfunding can help entrepreneurs determine more quickly whether the product or service the company offers is valued. If a company is unable to list for equity crowdfunding, or if it is listed but is unable to attract investments, it may signal that the entrepreneur’s capital and efforts may be better spent on a new project. While traditional angel investing and venture capital investing can send the same signal, entrepreneurs were more limited as to who they could secure funding from – they typically had to know individuals with money they were willing to invest in the company. 3 The process of tracking down and convincing enough investors to invest their money could take significant amounts of time and in many cases, the entrepreneur would never be able to secure enough financing. Equity crowdfunding can still take a significant amount of time, but it is able to prevent more viable companies from slipping through the cracks. The time not spent searching for financing saves money and more time can be spent on generating sales and capturing customers.

    Benefits to Investors: With equity crowdfunding is the ease of investment in early stage companies compared with traditional angel investing and venture capital investing. This opens up the potential for higher returns for these investors that they previously did not have as part of their portfolio. Of course, these returns come with elevated levels of risk. Studies by the Kauffman Foundation found that 35% of angel investment companies go to zero and slightly over 50% have an exit multiple less than one. While these facts are enough to deter many investors, it is the other half of the companies that must be focused on. More specifically, the companies that go on to be true winners are those that make up for all of the losers. The Kauffman Foundation found that about 5% have an exit multiple greater than thirty. 4

    These numbers clearly show the danger from failing to diversify investments in early stage companies. Fortunately, equity crowdfunding makes doing this quite simple for investors who can simply chose which ventures they want to invest in and which they want to avoid. This reduces time spent finding investment opportunities. The investor can be confident because typically any investment listed by a broker-dealer or funding platform will have performed significant due diligence with the goal of narrowing down investment opportunities to those most likely to reach successful exits. Despite these efforts, there will always be companies that do ultimately fail.

    Investors also have the benefit of choosing to invest in companies that have meaning or align with something that they are passionate about. The investor can provide funding and potentially see that product or idea grow into something that makes a difference in the world. 5

    Clearly there are many benefits to equity crowdfunding. It is a disruption to traditional investments in early stage private companies. Given the relative newness of the industry, the impact has yet to fully materialize, but as it becomes a more widely accepted investment vehicle, the benefits likely will show more clearly.

  5. #5
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    We have a very beautiful beach resorts, we need money desperately to build it, would there be someone helping us?
    Thank you

  6. #6
    Junior Member pro_larsen's Avatar
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    Yes, the benefits from equity crowdfunding are obvious. In comparison to donation based crowdfunding where you give money and hope the project you fund goes through with the promise of delivering you the product, with equity crowdfunding you actually own shares of the startup and can receive way more profit from it. For example, a startup gets bought by a large corporation (like Instagram by Facebook) and instead of having "just the product" you are now a shareholder of Facebook stocks.

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