1. Streamlined fundraising process
Typically, the offline fundraising process can be long, frustrating, and oftentimes fruitless. The traditional fundraising path typically goes like this:
Comb through your network to find appropriate investors you are connected to, introduce yourself or get a warm introduction from mutual friends or lawyers, send over your executive summary for consideration, schedule a phone call with investor (if you peaked their interest), submit your business plan (pitch), wait for investor consideration, continue the dialogue, investor due diligence, and finally, receive an investment.
Now compare that lengthy ordeal with this simplified online process:
Submit online application, platform conducts vetting/due diligence work, acceptance to platform, create your online profile, launch your online investment campaign, review all interested investors and choose the best fit, and then receive your funds!
The online process allows a company to have all of their documents and information in one place, so it’s a one-stop shop for interested investors. Not only is the process of accessing investors simpler, but also with the built-in outreach tools (at least on RockThePost– The company I co-founded) you don’t have to do the roadshow alone.
2. Access to larger network of investors
As a novice entrepreneur, you won’t automatically know who to tap into for investments. It takes time and effort to research the people you need to reach out to. With equity crowdfunding, each platform should have a sizable pool of accredited investors already lined up and ready to invest. While the process still expects you to reach out to your own networks, your raise is now viewable to potentially tens of thousands of investors looking for the next exciting opportunity.
3. Guidance during fundraising
Starting a business is overwhelming enough, trying to get others to see the same vision as you. Then add the process of fundraising on top of that, which can be a full time job that takes anywhere between six to twelve months, and you have an extremely stressful situation. That is where the guidance of equity crowdfunding platforms comes into play.
On RockThePost, the equity crowdfunding platform for startups, we know the importance of this council. As entrepreneurs ourselves, we found ourselves reaching out left and right for advice in our funding process, mostly learning by trial and error. Now, we are so excited to assist other companies in this same process, and lend our years of experience.
4. Clear display of brand
A company’s website is like its calling card, its appearance represents the core values and taste of the brand. Creating an equity crowdfunding campaign gives you yet another presentation tool for your brand, but this time with all of your financials and documentations clearly lined out for the investors. It’s a website with all the relevant items any investor could ever want to see.
5. Legal advantage
Companies typically are charged large legal fees during the lengthy fundraising process. Not only is the online process shorter, but at RockThePost we partnered with a legal team in order to offer vastly reduced legal services for companies who opt for it while crowdfunding on our site. Why should it cost money to raise money?
6. Companies can vet their investors
Are you particular about who works in your company? If so, then you will definitely have a say about your investors. Luckily, investment crowdfunding allows entrepreneurs to review all the investors who are interested in their company, and approve or deny their investment. The entrepreneur is still very much in control of their fundraising round, and this option helps create a very real sense of trust and commitment between the entrepreneur and investor.
7. Easy access to startups
Just like the online process has really streamlined the fundraising experience for entrepreneurs, investors also stand to gain from this. It’s a big misconception that investors are not always looking for good opportunities. They may get inundated with requests from all sorts of startups, but this process is a clear way for them to sort through the masses of companies and find the ones that they are directly interested in.
Investment crowdfunding offers a great opportunity for them to browse through a platform full of highly vetted companies, all looking for funding. In mere minutes, these investors can sift through the group of companies, finding the right match for their interests almost instantly.
8. Streamlined investing process
The process of vetting a company for investors is a lengthy procedure. However with online investment crowdfunding, half the work is completely cut out. Investors can go directly to the crowdfunding platform and register as an accredited investor. Once they have been approved as an investor, they can directly go in and search through the different companies, looking at the documentation and investor summaries immediately, and cutting out all the initial phone conversations and meetings.
In fact, many investors can simply identify a company they are interested in and directly make an investment right then and there. What used to involve a series of meetings, phone calls, and lengthy wait periods is now a seamless transaction.
9. Investment Visibility
Do you rely on the advice of certain colleagues or friends that are more knowledgeable than you in the investment space? When you are reviewing the companies seeking funding on an investment platform, you can see who has already invested in that brand. Instead of wondering if you should trust your gut on that new idea, seeing the caliber of individuals who have already placed their bets can help you make the leap.