What is Equity Crowdfunding?

Equity crowdfunding is a process that select business owners can offer to potential investors over the Internet. The only businesses that can make use of equity crowdfunding are ones that aren't listed on the stock market. People can choose to invest in the early-stage company. These people will receive shares in the business in question. Each investor will be a shareholder and partial owner of the business. This allows the investor to benefit when the company does well.

Who Does Equity Crowdfunding Benefit?

Benefits of Equity Crowdfunding For a Business Owner

There are a myriad of benefits of equity crowdfunding for both the business owner and the investor. In regards to the advantages provided to the business owner, being able to reach potential investors without having to worry about their geographical location makes finding investors easier than ever. Business owners don't have to spend time and money traveling to potential investors. Online platforms for equity crowdfunding allow companies to create an extensive profile for their business, complete with videos and founder profiles all on a single page.

This makes it easier for potential investors to get all of the information they need about the business in one location. Standard capital raising processes typically take a lengthy amount of time due to the sending of numerous emails, forms and attachments to investors. Crowdfunding makes use of online systems that handle all of the minute details, making the process a much simpler one.

Benefits of Equity Crowdfunding For an Investor

There are also a bevy of benefits of equity crowdfunding for the investor. For one, there's always the possibility of getting a great return on your investment. Since the business is just getting started, there's a chance that the return could be many times the initial investment amount. It also allows for diversification in a portfolio, since the investment can be considered a separate asset class. Investors might also be eligible for certain tax advantages. Some companies will provide rewards meant to entice potential investors into investing, which can help to mitigate the amount that's being invested.