What are startup's options for securing $50k - $5M in financing?
Generally it is assumed that the options for startups and businesses to pursue financing are as follows:
- Option A - VCs
- Option B - Angels
- Option C - Broker Dealers / PE / Hedge Funds
- Option D - Crowdfunding
In truth the options are:
- Option A - Crowdfunding / Angels / VCs / BDs / PE/ Hedge Funds
- Option B - Bootstrap then crowdfund
The reason that Crowdfunding is every startup’s first option is simple:
- Crowdfunding enables Founders to set investment terms
- With these universal crowdfunding terms, Founders can solicit investments from investors at all levels (accredited, non-accredited, institutional)
- Currently, Founders and Entrepreneurs exhaust themselves pitching to ONLY 4% of the accredited investor population; which is well known to have a 99% failure rate.
- Less than 1% of Startups receive VC funding.
- Crowdfunding enables Founders and Entrepreneurs to take the same pitch deck, due diligence, financials and disclosures and literally cast a wider net
Crowdfunding isn't static
The key to understanding, appreciating and then monetizing the art of Regulation Crowdfunding is the realization that it's more art than regulations. What that means is:
- There are no profitable funding portals
- Especially if the funding portals came into existence before 2019
- However, there is a new breed of funding portals that will be profitable by the end of 2021
The art of RegCF is that in order to reach the lofty goal of $5M there isn’t any single route. Yes, there are some guide rails but WHAT you do to raise your goal be it $5M or $50k is the fine art of strategy. HOW you execute that strategy is the dull nature of tactics. Why you care is because if you come from “traditional finance” your disadvantage is the speed at which innovation can occur, does occur and is pursued.
Crowdfunding = Innovation
The sole reason that RegCF exists is because traditional finance and venture capital is broken. If VC funding worked so well, RegCF simply wouldn’t exist. It's not a deba...more
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