Mythbuster: Startups, Capital, Equity Crowdfunding

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 By Grace kim,

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Traditional methods of raising capital are antiquated, inefficient, and extremely time consuming. On average it will take an entrepreneur anywhere from 3 – 6 months to close a funding round. But with capital raising and investing now available online (via equity crowdfunding), everything should be faster and easier right? No more scouring your network in search of wealthy individuals who might be interested in investing, spending time trying to get introduced to angel investors, cold emailing or cold calling angels/VCs, and applying to angel groups for a chance to pitch your idea.

With equity crowdfunding, you can now simply post up your video and offering details on the internet, and voila, the money from investors will start flowing in right? All you have to do now is sit back and wait for the investments to come in. Yes, raising money online will allow you greater access and reach to investors, but here’s why you can’t just sit back and expect the money to flow in without putting in the necessary effort to make your campaign successful.

Myth: It’s less work for startups to raise capital with equity crowdfunding

Reality: Here are 3 reasons why entrepreneurs need to stop thinking that all the work is cut out for them if they use equity crowdfunding.

(1) Greater reach to investors does not equate to less work.

The idea behind an equity crowdfunding platform is that it serves as a medium by which entrepreneurs can post their ideas online, and investors can view and eventually invest in the startups they like best. So for entrepreneurs, by posting their startups online, their visibility and reach to investors significantly increase. This however does not mean that entrepreneurs can and should stop talking to investors on the ground. An equity crowdfunding platform is not some magical place where swarms of investors will come and invest in your startup.

Think of dating sites that exist today. Your life is so busy with work and activities that you find it difficult to meet new people and date. By posting your photo & profile online, you now have exposure to hundreds, if not thousands, of new, potential partners you previously didn’t have access to. Your circle of potential new dates just expanded exponentially! But if you don’t make the effort to reach out online to those you’re interested in and ask for a date and figure out if you want to see that person after a few more dates, the chances of you finding a partner is still the same as what it was before you joined the dating site. Whether you’re looking for love online or you’re looking to raise capital money online, nothing good comes easy.

 

 

More on

https://www.returnonchange.com/blog/crowdinvesting-mythbuster-its-less-work-for-startups-to-raise-capital-with-equity-crowdfunding/

 

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