Does your startup business need a financial breakthrough?
Are the banks giving you grief on securing a loan?
Ever heard of equity crowdfunding?
Here’s everything you need to know about equity crowdfunding and how it works:
Many know about crowdfunding because of the popularity this form of raising capital has gained in South Africa over recent years. It is the traditional form of raising capital by donations.
We have been hearing of individuals or a group of friends raising funds for someone who needs financial help to realize their dreams, for example: furthering their studies, settling debts with educational institutions, going abroad for educational purposes.
Recently in the media, there was a buzz about a petrol attendant being crowdfunded because of his act of kindness, he helped a woman who forgot her wallet with gas money.
Raising capital through crowdfunding has generated a lot of interest in South Africa. But what is equity crowdfunding?
For companies and entrepreneurs that need capital raising and funding, there are many options to choose from, there is now another door that startup businesses can open to access capital.
In essence, Equity crowdfunding is raising capital from the crowd online through the sale of securities, for example, an investor or entrepreneur injects a certain amount of money in a startup in exchange for shares or a slice of that business.
- Anyone can invest in your business under equity crowdfunding. Potential investors visit a funding portal website and can explore different investment opportunities.
- Small businesses that need funding start a crowdfunding campaign to raise capital, sell their business to investors, set the goal amount and once it is reached, the campaign is closed.
- Equity crowdfunding is best suitable for startups that are trying to raise larger amounts of money and who have the ability to manage the investor relations responsibility that comes with giving away a piece of your company.
- It offers simplicity compared to any other form of capital investing. Entrepreneurs simply choose the right platform for their campaign and it also generates free media exposure for your business. A successful equity crowdfunding campaign gets attention from the media.
4 key factors for a successful crowdfunding campaign
An awe-inspiring video can be a powerful marketing tool and can convince investors to back up your campaign. The video should go with an excellent pitch to attract investors.
Promoting your campaign to your colleagues, friends and potential investors will generate traffic on your campaign.
Be prepared for questions from investors wanting to know more about your business.
Questions like How is your business performing? How it is growing? How are investors going to get a return? Investors will demand accountability.
Equity crowdfunding platforms such as Uprise.Africa are democratizing the investment process by opening the door to a larger pool of potential investors.
Find out just how you can make this work for your business with Uprise Africa, visit https://howitworks.uprise.africa/
A qualified journalism alumna from the University of Johannesburg who’s passionate about writing and story-telling. She believes in social change, shifting the narrative around social behaviours and relations such as stereotyping, racism, and to live in a society where we can all be free to exercise our human rights.
Busisiwe lives by this famous quote by the great Nelson Mandela “It always seems impossible until it’s done”.