Funded

Chapter 12. The Top 10 Tips for Equity Crowdfunding

Earlier in the book we introduced the concept of equity crowdfunding, whereby contributors receive equity in a company rather than a reward in exchange for their money, and we mentioned some of the best-known equity crowdfunding platforms (including AngelList). Equity crowdfunding is a form of venture financing that takes place primarily online, and it has recently risen in popularity as a tool for early-stage entrepreneurs.

Both private investors and venture capitalists can invest through equity crowdfunding. In this chapter, we’ll discuss how startups today are using equity crowdfunding platforms as a powerful tool for increasing the reach and success of their fundraising efforts.

Before we dive into our top 10 tips for equity crowdfunding, let’s cover some of the equity crowdfunding basics. An equity crowdfunding platform is first and foremost a place where investors can discover investment opportunities and purchase an equity stake in those companies, by participating in a funding round. Because equity crowdfunding platforms cultivate a community of qualified investors, they are a great place to discover and close deals with investors outside your direct network.

There are numerous equity crowdfunding platforms to choose from, with the most popular options being AngelList, SeedInvest, and FundersClub. No matter what equity crowdfunding platform you select, the mechanics of running your crowdfunding campaign will be similar. ...