Equity Crowd-funding

By: sterling funder

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Tuesday, 16-Jul-2013 15:17 Email | Share | | Bookmark
My life and crowdfunding

Hello, my name is Norman Milton and I have been working has a cashier in the local bank since 1987. My job is quite peaceful and I am pretty happy with the nature of my work. I have been saving money since long too. These days I am planning to invest my money in order to make some extra cash. according to the recent business news, the international investment market is going through a severe slump and it is a sign that this time if not good for me to make the kind of investment that can offer me good profit.

During my holidays, I go out with my friends and we play football. I love reading books and try to spend my time with my friends. Some of my close friends are taking part in Equity Crowdfunding activities and they say that it is really good to manage finances. There are a lot of websites that are dealing with crowdfunding. It is indeed a new way of making investment. I am also thinking about giving it a try.

If you are also interested to invest your money in a profitable business firm then crowdfunding can be a great idea for you to make handsome cash. You can get a lot of information about it through the internet. A lot of websites would also help you to gain necessary information in order to invest your money in the best way. My friends are happy with their crowdfunding activities and I think it’s going to help me well too.


Tuesday, 23-Apr-2013 17:36 Email | Share | | Bookmark
Crowdfunding Simplified

 
With so much talk of Crowdfunding lately, it’s important to fully explain what it is and how it works. There’s a lot of speculation and guessing out there, when in fact it’s a very simple and straightforward concept and process from start to finish. It involves raising money through a number of investors or donors, depending upon the type of crowdfunding. The process is completed through Crowdfunding platforms, where an individual entrepreneur can create a profile that describes the project in great detail. The best way to describe this is that it’s basically the same concept as asking your friends and family for funding, but here you’re asking the world. Through the Crowdfunding platform you are able to attract potential funding, but the power of social media is really where this will gain legs and begin to take off! It’s a way to bring awareness to the project/business while it’s in the early stages of development. There are four different models of Crowdfunding: donation, rewards, pre-purchase, and equity.

The donation model is the most common. Contributors make a donation to support the project simply because they believe in it. They do not receive anything in return other than a “thanks” but they fully understand this and just want to show that they fully support the project. There is no expectation of a return, and there is no contract.

The rewards model is one of the most attractive and popular models of Crowdfunding portals. The reward can be something intangible, such as a mention or listing as a supporter in print media, or it can be a tangible reward. For example, if the company investors produces custom hats, they might offer each donor a custom hat with their name on it, stating that they were a donor. Another example could be a film seeking production dollars that is offering people that donate at a certain level tickets to the premier screening, and those that contribute at a specific level may even have the opportunity to have a role in the movie. These more appealing and highly desired rewards are often limited to just one or two and they carry a premium. Just like the donation model, there is no stock in the company so there isn’t a securities issue.

Then we have the debt or lending model where the investor is essentially lending money to the company with an expectation of financial return on that investment. There is no ownership of the business given with this model and the SEC will be providing oversight of this type of crowdfunding.

Equity crowdfunding is unlike the other models as they do not give investors actual shares of the company. Both debt and equity crowdfunding fall under SEC regulation. At the present time, the SEC has not set the rules and regulations of equity Crowdfunding, so platforms like SterlingFunder.com are waiting for clearance in order to do business with unaccredited investors.. With this type of crowdfunding, the investors get shares of the company that they are helping to fund and also provide advice to the issuer. There is always the risk that a business will not execute its plan and leave an investor without a reward, or the satisfaction of seeing it materialize. A wise investor - even one who is donating with no expectation - will do as thorough an examination as possible.

If you are creating a project or company, you will to make your project look and appealing to engage your target audience of investors. This applies no matter what type of crowdfunding you do. Your investors will expect to see a solid business plan, but you won’t get that far unless you hook them right away. While someone looking for an investment is going to be more concerned with sales numbers, profit projections and their overall return on investment, someone who is donating for a reward is more inclined to judge a project on its “wow” or “cool” factor. If they like the concept, then they will probably donate. They aren’t looking for a return on their investment, they are looking for an interesting and innovative project to give their money towards.

So, why is Crowdfunding so appealing to some people? For many people, It allows them a chance to become involved in something on the ground floor. If the project becomes successful, they can say “I was part of that!” That’s a huge appeal to this style of funding. There are entrepreneurs who have a deep interest in fostering startups and nurturing a young business. That feeling of accomplishment is the goal of all who invest their money in crowdfunded projects.

This article was provided by SterlingFunder: Shifting Power from Wall St. to Main St.


Tuesday, 23-Apr-2013 17:35 Email | Share | | Bookmark
How To Secure Funding from the Crowd

Crowdfunding involves securing start up or growth money from a large pool of investors rather than attempting to find just one venture capitalist or traditional lender to fund the business. This is a great way for good ideas that may get overlooked by the big players to get a fair shot at being funded. This also gives investors a platform to get the first shot at investing in some of the most innovative ideas and concepts without having to take the majority of the risk. When a group of investors all go in together, it greatly reduces the risk and exposure each investor will have in the deal.

The Internet provides the platform for Crowdfunding, as it allows potential investors to find deals much easier. There are many portals, but overall they all operate basically the same. Here’s a general breakdown of how the process works.

1 The startup or business will create a profile on the website and will use their company details to establish the profile. They will then complete the questionnaire and also include as much detailed information as possible. This is a very important step in attracting the funding that they need, so it is important that extra attention and detail are put into the presentation part of the profile. The goal is to put as much detailed information into this in order to attract investors. An issuer must be as transparent and detailed as possible because this first look is the best chance to make a connection.

2 Most Crowdfunding sites will not charge a fee to establish a project or profile, but instead they will collect a percentage of the funded amount. The SEC still needs to put forth their regulations and rules, but it is widely believed that this will be about 5%. Every site will have different terms and conditions and we strongly suggest that these are fully read and understood before creating a profile.

3 The total amount requested is up to the issuer (with a maximum of $1 million for equity portals). Portals like SterlingFunder will be looking for good businesses opportunities for the investors. If their portal gets a reputation of allowing bad deals, investors will look elsewhere for opportunities. Maintaining high standards will be important.

4 Each project has a target funding goal, and the funds received are not dispersed unless that goal amount is reached. When placing the deal on the website it is important to ask for a realistic number, but a number that will ensure the end goals are met without delay.

5 Make sure you, as an issuer, clearly indicate what you are offering to the investors. In the reward crowdfunding model, issuers generally offer a product or service that they are creating, while equity crowdfunding issuers will be giving an interest, or share, in the company. All of this should be spelled in a detailed and clear manner.

Spend Time Researching: With so many different portals to choose from, make sure to spend some time to research and make a good decision. First, you’ll need to determine if you want to use a reward, equity or debt type of crowdfunding. Then check the portals that do that and look at all the information provided. At this time, equity crowdfunding is not an option for unaccredited investors, but many portals have already launched in anticipation of SEC rules and regulation and are providing news about crowdfunding and good education about creating your campaign. SterlingFunder is pleased to be among those who will be ready to launch projects as soon as the SEC says “go”!

This article was provided by SterlingFunder: Shifting Power from Wall St. to Main St.



Tuesday, 23-Apr-2013 17:30 Email | Share | | Bookmark
What is Crowdfunding & How Does It Work?

 
Crowdfunding has become a very hot topic as of late and has been describedby the media as an exciting new trend for small companies looking to expand and startups that require funding. In the current economic climate, traditional lending sources are generally not willing to take the risk.

Crowdfunding does for businesses what microloans do for individuals. Instead of receiving one large loan, the business will receive several small ones from a wide variety of investors. This allows the investors to pool their funds together and go in on the deal as a group, thus eliminating the large risk factor. The amount invested into each project is entirely up to the investor and this can range from several dollars all the way up to tens of thousands of dollars. It is up to the investor to determine how much risk he or she wants to incur (for unaccredited investors, this amount will also be regulated by the SEC). This is a great way for new investors to get their feet wet, so to speak, and learn more about investing in businesses.

There are many reward-based Crowdfunding platforms that have become very popular in the United States, and more are emerging as equity crowdfunding becomes closer to reality in the U.S. Reward crowdfunding is already happening, but equity crowdfunding for unaccredited investors is still on hold until the SEC finalizes its rules and regulations.

The current economy is responsible for the birth of this new funding option, as there are an increasing number of small businesses eager to get started, but the lending sources are almost nonexistent. The days of walking into your local bank and walking out with a small business loan are long gone. Banks want to see an established track record of business and revenue before they will sign off on a loan. This is where Crowdfunding comes in, as it gives these business owners a chance to get the money they need to expand or launch. The same companies that had the door shut on them by the traditional lending sources are being welcomed with open arms by Crowdfunding investors.

Finding an Angel Investor or Venture Capital investor has always the next option when the big banks would decline to offer a line of credit or loan, but these Investors are very selective about the type of companies they will invest in. They typically want to be the majority owner since they are taking all or most of the financial risk. They look at “profit” margins and make their decision based on how quickly they can make back their investment and how much money they can make both short and long term. It is all about the numbers when it comes to working with a large Venture Capital group.

Crowdfunding is a more personal approach and often times investors will invest in a company or concept based more on personal interests than just on the profitability. This isn’t to say that the investors that opt for Crowdfunding aren’t in it to make money, because that is the ultimate goal of any investment, but they are more apt to look at the whole picture and if they believe in the company and or the people behind the company that might help sway their investment dollars along with the profitability and growth estimations.

So, how does it work? Well, think of it almost like a pool with several different ways to benefit from giving money towards the “goal” or amount desired. In reward crowdfunding, someone might want to support the entrepreneur and just want to donate to the project. There is no financial return on this type of investment, although many times the investor receives a “perk” for the money invested. There are often specific donation amounts that offer rewards related to the product or service that the company offers. Individuals that “buy in” for these offers are not receiving any equity in the company, but they are rewarded for their contributions. Then, there is the traditional “investment” option, known as equity crowdfunding, where the amount invested is returned in equity shares of the business.

Investors are excited about Crowdfunding, and entrepreneurs and small business owners love the options it gives them in order to raise the funds they need to start or grow their business. When a company has a great idea but no means of making it reality because traditional lending sources are not a viable option, Crowdfunding gives them hope. It also gives them the opportunity to be very creative with their offers to investors! For example, a recent movie was seeking funding through a popular reward-based Crowdfunding website and for specific levels of donations it would put the donors in the movie as extras. So, not only were these investors able to help get a major movie production funded and say they were a part of it, but they also get to be featured in the movie. This out-of-the-box type of creativity is what is drawing investors to this new investment vehicle.

Since Crowdfunding is fairly new it is hard to predict where this form of funding will end up to in the coming years, but based on its initial popularity it is a safe bet that many companies will continue to seek out funding in this manner and investors will continue to bite at these opportunities. This is a more “social” form of investing designed for the Internet, and when an investors join with others they not only reduce individual exposure and risk, they get to share the reward if the business is a success. Also, you will find that investors are also able to follow some of their own dreams through crowdfunding by investing in industries or sectors that they have not dabbled in before. It is quite possible that an investor will be introduced to a new business area after discovering it through a Crowdfunding website. Investors and entrepreneurs both win, so be prepared to see this funding source continue to grow in popularity.




Tuesday, 23-Apr-2013 17:27 Email | Share | | Bookmark
Crowdfunding Delivers Entrepreneurs Capital

An entrepreneur isn’t something that you can wake up and attempt to be. You are either one or you are not. It takes a rare breed to take on the challenges and fight the battles that an entrepreneur faces during their climb to the top. It takes a certain drive and determination that not everyone possesses. All of the passion in the world won’t cut it without the following three elements: solid advice, substantial capital, and a network.

Capital is always the key piece, as without it even the best idea will not take off beyond a dream or vision. You would think that it would be as easy as walking into the local bank and requesting a loan, but that is not the case at all. In fact, obtaining a loan from a small local bank is virtually impossible these days unless there is substantial collateral to back up the loan. That brings up another point, because even if a local bank decided to lend it would be a loan, as they do not invest in companies or projects. The SBA isn’t in the business of lending money, they will only back those bank loans provided there is collateral to guarantee the note. What about venture capitalists or angel investors? The media seems to love to mention these potential options, but in truth they only account for 1% of the total funding that entrepreneurs seek, and with the current lending extremely tight right now where does that leave them?

There is one funding source that they can always count on, and that is their own savings. Combine that with personal lines of credit, credit cards, and even second mortgages on their homes, and many will go this route when there are no other options present. This seems viable, especially if they have a solid idea and means to launch it, right? Well, the fact that only about 10% of entrepreneurs are able to secure all of the capital needed by doing this leaves the other 90% struggling to find other capital sources. Personal credit is very tight right now and the housing market is a disaster with few lenders even considering refinancing options, it makes the “personal capital” option very rare. This leaves many to seek additional capital from family members and friends, and although it might be easier to seek the funding from them it can lead to a very uncomfortable situation down the road in the event that the project is not a success as anticipated. Sure, everyone wants to think that their idea is pure gold, but the reality is that far more ideas and businesses fail than make it.

When the above funding methods and sources fail where does this leave an entrepreneur? Enter Crowdfunding! This exciting way to raise the funds required is fairly new and has been gaining a lot of exposure and interest over the past several months. There are a number of websites dedicated to allowing businesses to list their projects in order to attract investor interest. The simple concept has caught on heavily because of social media and the appealing process of finding a unique and interesting idea by simply looking on these sites and filtering down the options to find projects in specific industries that are of interest.

Entrepreneurs are excited about Crowdfunding because they are able to pitch their idea in one central place and allow potential investors to review their information in great detail. It all comes down to an informative and thorough pitch that not only explains the project, but also gives the potential funder some insight on the company or people behind the project. While a solid business plan is always important, investors also like to get an idea as to who the individuals are behind the project. They need to be sure their funds are going into the hands of competent entrepreneurs that have a very realistic shot at making it. Nobody wants to just throw his or her money away, so it is important to have a very strong overall pitch.

When all other funding looks slim to none, Crowdfunding gives a legitimate chance at obtaining the capital needed to get the project off the ground. With so many different Crowdfunding websites to select form it will require some research to make sure that the project is being presented on the best site based on the industry and nature of the project. There are some Crowdfunding sites that only list specific opportunities, such as vide game development, or technology products. Then, there are sites that have virtually no restrictions and they are very easy to spot as they allow any project to be listed. Sometimes these sites will drive away legitimate investors because of the quality of the opportunities. Spend time looking for the perfect website to list on, as it can mean the difference from receiving little interest and reaching the funding goal.

Deals are receiving funding on Crowdfunding websites and we encourage entrepreneurs to take a look at projects that are now closed after successful funding and see how they presented their opportunity. They obviously did something right, so make sure to look at some successfully funded projects to get some profile and pitch tips. Also, look at the projects that exceeded their goal by a large amount. In some cases there will be projects that received so much attention and interest that they raised 1,000% and more of their goal. It is a good idea to see what they did and how they presented their offer.

Although the traditional lending and capital markets are not providing the kind of funding that many companies need, Crowdfunding comes to the rescue with a very attractive option for those companies that need that capital injection in order to succeed. With some research and planning it is very possible to get a pitch in front of the right individuals. For many this is the absolute last shot at obtaining the desired capital, so plan wisely and present as if there are no other options.



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