Equity-Based Crowdfunding: The New Kid on the Block
04/18/2016 04:47 pm ET | The Huffington Post BLOG
By David Glickman Telecom innovator, serial entrepreneur, & visionary
You’ve come up with a great business idea, and after plenty of due diligence and sleepless nights, you’re ready to turn it into something big. Naturally, your first order of business is money. There are a number of ways to raise early capital for your business, and understanding your options will set you up for the best chance of success.
What we hear about all the time in the media is generally the Series A to D rounds of fundraising, where a business has shown traction, received market validation for which they can justify significant valuations, bringing in funding in the single to triple digit millions of dollars from venture capital or private equity.
But to get to this point - to build a prototype and have something to sell to early customers to get this validation - you need seed capital. Depending on how much cash you need to get started, and how deep your pockets are, you may be able to bootstrap your way to a Series A, using salary from a “day job” or levering your (and your co-founders’) savings. But if that won’t cut it, there are a few other options. Fundraising amongst “Family and Friends” allows an entrepreneur to legally include up to 35 non-accredited investors in their pool of early investors, while fundraising among “Angels” allows you to tap into rich individuals that qualify as accredited investors, who have an interest in the startup community.
Or there’s a completely different approach - crowdfunding - that allows the general public to get behind you and your brand...
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