5 Benefits of Raising Capital Online Through Equity Crowdfunding

by Sang Lee, CEO & Founder, Return on Change

Equity crowdfunding has become something of a legend in the startup industry. It is being hailed (and criticized) for being a brand new conduit for startups to raise capital and for entrepreneurs to launch new endeavors. It’s true that a great amount of potential capital could be unlocked by including the non-accredited investors in the startup industry.


Although regulations for non-accredited equity crowdfunding have yet to be finalized, the numerous benefits for startups to work with investors have emerged on the Internet.


Sang Lee—CEO and founder of Return on Change

Sang Lee—CEO and founder of Return on Change

Here are 5 ways that entrepreneurial life is made easier through equity crowdfunding:

1. Telling a Story to Investors With a Single Link

Datarooms have been around for a long time and storage on the cloud is ubiquitous today with Box and Dropbox being some of the more popular tools. However, equity crowdfunding has brought a new way of presenting an entire capital raising pitch with a single link.

Companies can maintain a profile, create engaging videos, access founder profiles, and use due diligence tools that potential investors can digest in a single, easy-to-comprehend page. The same information can be used to share key documents critical to the startup funding process such as term sheets and financial projections.

The days of attaching heavy emails and conducting lengthy phone calls to tell a simple story are slowly disappearing. Founders are becoming increasingly skilled at storytelling through a digital medium in a concise and meaningful fashion.

2. Remaining Compliant

The capital raising process (a.k.a Offering Process) and the regulations surrounding private startup offerings are often murky and difficult to navigate. Many of the mistakes or omissions made by entrepreneurs go unnoticed because these were private transactions. As fundraising continues to become more public and transparent, it’s going to become increasingly important to have processes that allow entrepreneurs to stay within the boundaries of regulation. Equity crowdfunding helps manage these protections for both startups and investors by making the process more streamlined and affordable.

3. Reaching Investors Far and Wide

Prior to the JOBS Act, entrepreneurs were banned from discussing capital raising with strangers. This forced entrepreneur and investor partnerships to be limited to personal networks and – more often than not – geography. As information has been increasingly shared on the internet, the innovative platforms for equity crowdfunding has not only spurred new tools and avenues for startups to reach investors, but also enabled investors to access investments they may have previously missed.

Startups that raise capital on equity crowdfunding sites can share their deals with a widespread accredited investor base without relying on expensive and time-consuming travel.

4. Seamless Transition From Launch to Close

From launch to close, the capital raising process is extremely chaotic with endless emails, incorrect forms and attachments, all essentially culminating in expensive legal work. In recent months, investor capital raises have used online systems to make the whole process seamless- from the updating of information for investors to the processing and dissemination of funds and closing documents. It’s a brave new world where entrepreneurs and investors can act as their very own bankers with all the right tools at our fingertips.

5. Investors, Customers and Evangelists

In the past, entrepreneurs had to chase down investors, marketers and evangelists separately, with very limited overlap. Asking our friends to evangelize and support our business was one thing and sourcing funds from rich uncles and more established professionals was a separate process. Even more time was spent on identifying and capturing target customers.

Through equity crowdfunding, these processes have become one and the same. Investors have become supporters, evangelists, and customers. With these blurring lines and the introduction of ‘super’ supporters, startups can now focus on executing and delivering the best service / product possible.

Also: published in HuffPost Small Business

Tags: ,


The VergeDonald Trump's terrible crowdfunding site was a microcosm of his political careerThe VergeAnd from the beginning, the site had Trump's populist edge. Zanker boasted that “the reign of Kickstarter's Brooklyn hipsters is over,” referring to Kickstarter's New [...]

Social media, crowdfunding skirmishes encapsulate Endy debateThe Herald JournalAfter that, a campaign with the same goals and the same organizer appeared on a separate crowdfunding site, FundRazr.com. This campaign also drew negative attention on social media, and after a few hours th [...]

FortuneCrowdfunding: Women Better at Raising Money Than Men Are ...FortuneA new study has found that women are generally better than men at crowdfunding.Women are better at crowdfunding than men, shows study | The ...The Independentall 3 news articles » [...]

Wired.co.ukAfter budget cuts, Museums are crowdfunding to preserve historyWired.co.ukIn 2015, the Smithsonian National Air and Space Museum in Washington, D.C. launched its very first crowdfunding campaign to 'Reboot the Suit'. The idea was to raise much-need funds to conser [...]

ForbesWhy Crowdfunding Is Still Booming, Especially For Chinese Tech CompaniesForbesBased on recent media reports, it looks like crowdfunding is now in the "disillusionment" phase of the famous Gartner hype cycle, after peaking a few years back. I will argue that crowdfundin [...]

Yahoo SportsCan crowdfunding save women's college hockey? - Yahoo SportsYahoo SportsNorth Dakota cut its women's hockey program in March, in one of the saddest and most stunning decisions to rock the sport at the collegiate level. “When you ...Gophers women's hockey con [...]

Business Daily (press release) (blog)How Women Trounce Men When Raising Seed Crowdfunding CapitalForbesMale entrepreneurs may account for the majority of business owners raising finance on crowdfunding platforms in the UK, but their female counterparts are far more likely to get the s [...]

TwinCities.com-Pioneer PressWCHA announces crowd-funding campaign to bolster women's hockeyTwinCities.com-Pioneer PressThat mindset led the WCHA to announce a crowdfunding campaign on Thursday to help fund the league's expenses and lessen the financial burden of the seven re [...]

Gamasutra (blog)Gamasutra: Anti Danilevski's Blog - The problems of crowdfunding ...Gamasutra (blog)The Art & Business of Making Games. Video game industry news, developer blogs, and features delivered daily.and more » [...]

YourStory.comA crowdfunding portal ensuring total authenticity of cases, MeHelp lets you donate confidentlyYourStory.comIn March this year, Samiya Hafeez, a 22-year-old woman from Hyderabad, was arrested for running a fake crowdfunding campaign through which she collected almost Rs 22 [...]

CFB Finance


  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |