EQUITY CROWDFUNDING: HOW TO START AND WHY IT IS WORTH?10.04.2019
Equity crowdfunding is a fast-growing form of financing innovative projects and startups. What is it for and how to start? Here are some tips.
- Investment or philanthropy?
Both. The main purpose of equity crowdfunding is to get funds by a startup to develop their project. As a rule, it is something new, an innovative idea or technology that requires support at the initial stage of development. But there is also the other side of this coin. Equity crowdfunding is not a charity. Because everyone who pays even the smallest possible amount becomes a co-owner of the business by obtaining a small number of shares in the company.
- Can you make money from it?
It depends. Nobody is able to guarantee that a specific young company or startup will definitely succeed. Many ideas over time are brutally verified by the market. Companies that succeed, after a few years are a few, a dozen or even several dozen times more worth than when they started equity crowdfunding. This is the moment when the symbolic number of shares received in exchange for support can reach a specific, measurable value and be sold with a large profit.
- How can I sell my shares?
This option is possible on crowdfunding platforms like Seedrs, where the ability to buy and sell shares between investors is currently being tested. As a rule, the best opportunity to free yourself from the shares will be the moment when the company will transform into a joint-stock company and enter the stock market or will be sold entirely to a large industry investor.
- Where to look for projects?
There are many equity crowdfunding platforms, we have chosen the oldest and most experienced platform in Europe: Seedrs (www.seedrs.com). It is a British platform thanks to which 788 startups (including Revolut) from around the world have already acquired nearly 650 million euros from investors! Seedrs was recognized in 2018 as the most trusted platform in the world.
- How much to start with?
It's up to you and you should think carefully before you make that decision. Equity crowdfunding treated as an investment is at high risk. It is an investment at a very early stage of the company's development, which means that on one hand, the risk is very high, but on the other hand, if the company succeeds in achieving its success and multiplies its value - the investor also contributes to this success. It is worth to read the rules and information on the website, for example, at www.seedrs.com and to make decisions with your head, diversifying your wallet.