Equity crowdfunding – a new way of financing early-stage startups

By Vali Birzoi October 17, 2014,
Crowdfunding websites raised last year no less than $5.1 billion and this newborn industry is expected to grow by more than 92% in 2014. No wonder that it exerts both attention and attraction and we couldn’t miss to address the matter at How to Web Conference 2014.

In the last five years we witnessed the ‘democratization of investments’ through platforms such as Kickstarter or Indiegogo and crowdfunding became quickly a convenient alternative to raise money for financing early-stage product development.

But as the phenomenon evolved to more complex forms and begun funding early stage startups not just product development, Revenue sharing (businesses agree to share some part of the revenues with the investors) or Equity return (investors get a small equity in the enterprise or startup) emerged as options for long time investors, who can wait for a company to grow their profits and/or revenues, or for an exit event.

 

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New platforms like AngelList, Seedrs or F6s came to the market to address Equity crowdfunding’s specifics and they have simplified the fundraising process at both ends. The startups are assisted in preparing the fundraising campaign and the minimal due-diligence required process and crowd investors are provided with trustworthy information and the opportunity to get return from a portfolio of startup investments.

Take for example Drummond Gilbert, who recently raised £50,000 investment for his collaborative consumption car share startup, goCarShare, from 145 backers through Seedrs. Or PixelPin, whose co-founders weren’t afraid of having 193 investors back their growth and raised £150,000 in record time.

So what are the current challenges and the best practices to overcome them? What type of investments should one expect from crowdfunding? And, if all goes well, how do you deal with the investor crowd?

These are some questions many of you have in mind, entrepreneurs and investors alike, and you will find the answers at this year’s How to Web Conference. We’ve prepared a special panel discussion on Equity crowdfunding in the Future trends & Entrepreneurship track.

The answers to your questions will come from panelists Sean Kane, co-founder and CEO of F6s, the biggest global platform dedicated to tech entrepreneurs, Ricardo Sequerra, Startup Community Builder at Seedrs, an Equity crowdfunding platform for investing in early-stage startups throughout Europe and Dilyan Dimitrov, co-founder of Eleven Acceleration Venture Fund, an investment fund for innovative startups from Bulgaria and the region. Eleven invested in Kown, also an Equity funding tool that helped three of the Eleven’s backed companies to raise additional funding.

The talks will provide attendees with an insight look on various and often sensitive aspects of Equity Crowdfunding, from legal or even moral aspects of calling on non-accredited investors, to which type of startups are best suited for this type of fundraising and how to minimize the risks.

You will find what makes successful fundraising campaigns like those above and you’ll be able to take an in-depth look at Equity crowdfunding by attending the ‘Financing your startup, the Equity crowdfunding way’ panel at How to Web Conference 2014. So get your very early bird ticket for the Future trends & entrepreneurship track starting at 59 EUR (special price available until October 22)!

SOURCE:

http://blog.howtoweb.co/2014/10/equity-crowdfunding-a-new-way-of-financing-early-stage-startups/

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