Top Crowdfunding Reads of the Week (9/18/15)
Recommended Read #1
In “To Encourage crowdfunding, Change the Definition of an Investment Company,” the idea of changing what the term ‘investment company’ truly means is brought to the table – a concept that is one of the few items left to open the doors of crowdfunding to all.
Instead of viewing special purpose vehicles as investment companies, the article’s author proposes that the SEC differentiate the two. When you begin your entrepreneurial journey, you can sometimes get carried away on the number of investors you gain through crowdfunding, which can ultimately have a negative effect on your future if you were to seek funding from an angel or venture capitalist. Instead, the author suggests utilizing one ‘company’ investors for the crowdfunding, which would later imply that your company only has one investor – saving you the trouble of dealing with numerous investors.
Although the JOBS Act has done its part in helping businesses grow and receive increased capital, the smaller details have made the path more difficult than ever for startup companies seeking investment.
If the SEC clarified the definition of investment companies and allowed the SPV’s to be exempt, then small startup companies will have a fighting chance raising money through crowdfunding to eventually, go on to bigger and better things.
Recommended Read #2
Up until recently, reward-based and donation-based crowdfunding were two of the most rapidly growing ways of raising capital for companies – big or small. Now, equity-based crowdfunding is entering the scene and will potentially rock the world of crowdfunding beyond what anyone can expect.
To sum things up, Regulation A+, the new equity-based crowdfunding, allows companies to raise capital from the public, placing lower amounts on one tier and higher amounts on the second. This particular choice of crowdfunding isn’t necessarily for smaller companies; larger businesses may have better luck with the option, since the lower tier is intended for businesses who raise up to $20 million in one year.
As things slowly change for businesses that partcipate in crowdfunding, it doesn’t matter which route you take; getting a little advice from successful crowdfunders can help pave the way.
Incorporating your business can play a huge role in becoming a succesful company that uses rewards-based crowdfunding.
Some other helpful tips include adding videos to your campaign to share more about your business and what you intend to achieve through your campaign, as well as building a strong social media following – which can have a positive impact on your campaign as a whole.
Although equity-based crowdfunding has still left many questions unanswered, soon enough, businesses will have the chance to explore this new option and see what kind of success they can achieve.
To read the full article, click here.
