So you’ve done your homework and you’ve spent the right amount of time researching and understanding the different types of equity crowdfunding platforms available to you. You’ve identified your priorities based on your type business and come up with a shortlist of platforms that you feel will be most suitable to support your funding campaign and that will allow you to raise money successfully.
Now, this is the point where it’s important to dive even deeper into the platforms and to look at the individual features and characteristics of each platform. Are you going to have to be able to stump up cash up front to launch your campaign, for example? Or are you looking to get your campaign in front of an international pool for investors?
Every entrepreneur and SME will have a different set of priorities. While one person will find the costs or the minimum target amount the most important, others other will make the decision based on the specific industry focus of the platform. Whatever your priorities are, here are a few tips to consider when putting the finishing touches to your decision:
While many crowdfunding platforms offer financing for any kind of industry, there are other platforms that focus on a particular segment. Others may only favour more companies in the creative industries, for example, while others are more flexible in terms of the types of companies they support.
Equity crowdfunding platforms also vary in the size of the pool of investors that they engage with. Many platforms offer nationwide coverage in the country that they are based in, while some others may only offer an investor base at a local level. But do you want to appeal to international investors? Entrepreneurs with plans to expand their business across borders within a short period of time would do well to choose an equity crowdfunding platform with an international investor-base.
The minimum investment amount also varies with each platform. Often campaigns based on loans or shares have a minimum entry fee. While going in with a large funding target may look good from a PR perspective, going in too high can also be counter-productive and alienate those investors who may have stepped in for a lower minimum amount. Research what other entrepreneurs with similar campaigns have chosen as their funding targets, especially their minimum funding levels, to find out what might be a suitable target for you.
Degree of regulation
Another important aspect for an entrepreneur or SME to consider is the extent to which an equity crowdfunding platform is regulated. Has the platform been approved by it’s national financial authority? And what about international regulation in other countries? Regulation across multiple jurisdictions enables entrepreneurs and high growth businesses to raise much needed expansion capital and create new partnerships for growth.
Platform fees and T&C’s
Finally, crowdfunding platforms differ from each other in in terms of costs and general conditions. For example, while most platforms do not charge a one off fee to run a campaign on their platform, others can charge a flat fee that has to be paid regardless if the campaign is successful or not. Some platforms also charge investors for making an investment.
Also, don’t forget to consider the general terms & conditions provided by the platform, in addition to the costs involved. For example, many platforms will provide marketing support to boost the campaign, or may contribute to its success by playing a role in matching campaigns to potential investors.