CARTOONS BY CHRIS BRITT

HOW DOES IT WORK?
There’s no set format for how an equity financing campaign works. As with any
funding mechanism, you should use due diligence in researching and using equity
crowdfunding, since it is still fairly new. That said, there are generally three main steps
for equity crowdfunding:
1. You will need to create and publish a profile of your business and required funding
needs. You can also create a public profile page with your own URL to share with
others to expand your reach.
2. It’s recommended that you use business plan and analysis software to optimize your
planning. Those that do are 10 times more likely to obtain funding, according to
Equity Net.
3. Share your plan with investors who meet your ideal profile. There are a bevy of equity
crowdfunding sites out there, such as Wefunder, Early Shares, Fundable, Crowdfunder
and EquityNet. These platforms allow you to communicate with thousands of
prospective investors, including angel investors, venture capitalists, business
supporters and more.
ADVANTAGES
A wider investment pool. Allows you to expand your network of potential investors. You
don’t have to rely heavily on personal networks or accredited investors as in the past.
Reduced investor risk. Smaller amounts of money from more investors spreads the
risk. Equity crowdfunding can increase the chance a riskier venture will be funded in the
earliest stages since risk is shared more broadly and the investment is smaller.
Simplicity. Entrepreneurs can use traditional marketing skills to access and attract
investors, providing them with videos, information and a profile instead of sending
endless long-form emails back and forth.
Evangelism. The larger pool of investors increases your ability to gain awareness of your
startup or enterprise. As investors, these people want you to succeed and will readily share
your story with others.
Critical mass. Crowdfunding is a fairly accepted funding strategy, both from the business
and investor perspective. Investors can use CrowdRating to determine which investment
is best for them. CrowdRating rates every pitch on leading crowdfunding sites according
to the quality of their management, the viability of their idea and the terms of the
investment.
Good source for feedback. Your investors will give you a good idea of the viability of
your company, product or service. The more investors, the greater the chance it will be
successful.
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