The circulation of venture capital in 2020 has been surprisingly strong offered the year’s general unpredictability, but while investors have showered lots of dough on growth-stage business, seed-stage startups are down 32% last quarter compared to the year before.
There have been lots of current discussions about alternative financing routes for founders, and one of those oft-overlooked courses has been equity crowdfunding. While crowdfunding platforms like Kickstarter push consumers to back unrealized tasks in exchange for items or other services, equity crowdfunding permits consumers to in fact invest cash and receive a piece of the business. It’s not a conventional course, but it can be a viable alternative for companies that have a close relationship with an engaged consumer base.
The Security and Exchange Commission’s Policy Crowdfunding standards were embraced under Title III of the JOBS Act back in 2016, however because lots of entrepreneurs were not familiar with how to get involved, many of the startups that have taken advantage of it haven’t been the highest quality. The tide could be turning: This week, the SEC upgraded a few of its assistance on crowdfunding, eliminating some uncertainties and increasing the quantity of capital companies can raise from both accredited and nonaccredited financiers. In addition, business can now raise $5 million annually using equity crowdfunding, compared to the previous limitation of $1.07 million.
Life has actually gotten easier in other ways as well for creators pursuing this fundraising type and the platforms that seek to simplify it.
Wefunder is one of a handful of equity crowdfunding platforms that have popped up in the last few years. Before a company can raise on its platform, Wefunder vets them prior to enabling them to use their network of amateur investors who can invest just $100 with the mean investment sitting at $250. Last month, 40 companies introduced on Wefunder and jointly raised $12 million, according to Wefunder CEO Nicholas Tommarello.
Article curated by RJ Shara from Source. RJ Shara is a Bay Area Radio Host (Radio Jockey) who talks about the startup ecosystem – entrepreneurs, investments, policies and more on her show The Silicon Dreams. The show streams on Radio Zindagi 1170AM on Mondays from 3.30 PM to 4 PM.