A version of this article appeared in the July 2015 issue of Entrepreneur Middle East Magazine.
Here’s a list of six of the top reasons why entrepreneurs should use an equity crowdfunding campaign to raise capital for their business.
By bringing the capitalisation process online and allowing pretty much anyone to invest, equity crowdfunding makes raising capital far more efficient than with more conventional sources. Instead of having 50 meetings with 50 potential investors, you can have one meeting with 10,000.
2. Your customers can buy into your success.
Equity crowdfunding’s democratisation of the private equity investment process allows businesses to get their fans and customers to buy into the company, to share in its success, and thus cement their loyalty to the brand.
3. Campaigns are great for marketing and PR.
Equity crowdfunding campaigns are a great way to get exposure for your business, both in the media and among visitors to the platform.
4. Brand ambassadors.
Once an investor buys equity in your company, they are going to want it to succeed. By building a wide base of investors through equity crowdfunding, you can create an army of brand ambassadors, who will spread the word about your business, help you make strategic connections, and perhaps provide you with follow-on funding later on down the road.
5. Market expansion
A global crowdfunding platform such as Eureeca can serve as an ideal tool for facilitating market expansion. A campaign can be used to raise capital form investors in markets targetted for expansion, thereby planting the seeds for this to become a reality. This is very much linked to the brand ambassadors point mentioned previously.
6. Cash flow concerns.
Unlike loans, which require regular interest payments that can sap a business’ resources, equity investments won’t affect your cash flow.
Does crowdfunding for equity sound like the right financing option for your buisness? Let’s take it a step further.