Equity Crowdfunding Sites: Your Choices

There are many ways to look for the best equity crowdfunding sites for your pitch. Different projects or investment ideas may require additional homework, so remember that some but not all of the following may be relevant to your choice. Think about your personal preferences and the different things that anyone would need to know, and that will be your guide. For example, if your project can make a strong case visually, look for an equity crowdfunding site that offers that approach. On the other hand, if you need to impart facts and numbers, you may find subtle differences between equity crowdfunding sites that help you choose. Here are some general rules:

The best equity crowdfunding sites give data.

Look for equity crowdfunding sites that give a lot of data to potential investors that appear reliable and easy to understand. Make sure that these statistics make it easy to decide not only which investment is worthwhile but also whether to invest in at all. The best equity crowdfunding sites will present a well-rounded and honest look at investor options, with functions that make it easy to compare. There will not be much pressure, and the information will appear well-rounded and fair as if it has been vetted by someone outside the person making the request. If your pitch can win based on data, these may be the best equity crowdfunding sites for you.

The best equity crowdfunding sites have traffic.

The top equity crowdfunding platforms have attracted the most people and the most money, at least when compared to sites that have been around for an equal amount of time. You can benefit from the collective homework done by others when you choose the best site for your investment. In other words, trust the crowd – where they go may be quite informed!

Most top equity crowdfunding platforms are established.

While it is difficult to say whether the best crowdfunding sites for equity investments are necessarily the oldest ones, there can be an advantage of looking toward an older site for your investment if it means that you can do more independent research about others’ happiness with the site. Look up independent reviews – though finding a genuinely independent review of the best equity crowdfunding websites can be a challenge – and also find forums where others relate their experiences. One way to see whether a site review is truly independent is to notice whether or not it has links to the sites being reviewed. Links may mean the site is paying the person a commission.

Finding the best equity crowdfunding sites

If you know other entrepreneurs in your field, ask around – you may be surprised to find out how much homework has already been done by other entrepreneurs. They may have chosen among the best equity crowdfunding sites themselves, and you can use their recommendation. They may have tried multiple sites and can tell you how they all stacked up.

Equity crowdfunding sites innovations

This may sound like we contradict ourselves, but you should watch for new equity crowdfunding sites that bring innovations. You may not want to dive in immediately to any new site, but we don’t want to dismiss them entirely. Every one of the top crowdfunding sites started somewhere, and if you are looking for funding but don’t want too much competition, this might work. It may still be prudent to wait to see if the site has staying power and seems to be attracting investors.

Look for independent PR

The best equity crowdfunding sites will get PR that is genuine and well-earned. When a site receives the notice of national media or a well-known and popular project gets noticed, the site itself may get new attention from investors and recent presentations from excellent projects. This surge in traffic and interest can be suitable for your use. Keep notice of mentions in the news or on popular general crowdfunding websites and see if you can capitalize on that timing.

Equity Crowdfunding Sites Q&A

Are there specific “best” equity crowdfunding sites?

There are many equity crowdfunding sites available for your project or purpose. There is no specific equity crowdfunding site that we can say everyone should go to. Most consultants that only refer to one site may have a specific deal with that site that compels them to do so. We provide you with a short list of equity crowdfunding sites that may be a good fit, along with information about each. The best equity crowdfunding sites for you may differ from those for another project.

Do equity crowdfunding sites charge fees?

Most equity crowdfunding sites charge fees, but the fee agreements can differ among the top sites. One of the pieces of homework that you should do (and we can help with) is comparing the fee structures of different equity crowdfunding sites to see which one may be best for you. Some sites charge investors some of the fees, others charge you, and some use fees along the way, while others charge a fee at the end depending on how much you raise.

Do equity crowdfunding sites allow other forms of crowdsourcing?

Many equity crowdfunding sites allow you to have some of your raise be debt or rewards. These combinations can help lower the amount of equity you give up in the deal, but they can be complicated. Some investors prefer deals with something other than equity to guarantee some payback, even if the product or service is not profitable.

Why don’t we list sites here?

All of the above seems to hint at the idea that for your purpose, there is one best site for all. However, you need to remember two things when entering this arena. First, the best equity crowdfunding sites for your project may be unique to you; therefore, you will find no easy answer without researching. You can find lists with a simple search, but keep in mind that you are searching in general – we feel that finding the best equity crowdfunding sites uniquely fits your project and is not necessarily at the top of a list somewhere. You’ll notice that we do not have affiliate links like other sites – we’re not looking to publish a list that will get clicks and payments to us.

These are just some of the questions that may come up as you look into equity crowdfunding sites, but we are here to answer any other ones that come up. We also have posts about the pros and cons of crowdfunding in general and a look at equity crowdfunding from the investor side.

We can help you choose equity crowdfunding sites for your purpose with our free matching services. Again, we consider all areas, not just an affiliate or two! Feel free to contact us to discuss this further.

The post Best Equity Crowdfunding Sites first appeared on Performance Psychology Group, LLC.

Equity Crowdfunding Steps

Of course, the first step in Crowdfunding equity investments is choosing a product, service, or business to invest in. You can look at any number of well-known crowdfunding websites or look for pitches that are made independently by business owners on their sites. You might also read about a company looking for funding in a trade or business publication. Or, if you have made this type of investment before, you might hear directly from the business. But how to narrow down all your potential choices if you want to invest in startups for equity? Here is a start:

Is it scalable?

The first thing you need to wonder about the product or service in question is whether it is scalable and flexible. In other words, will a lot of people want it? There may be many creative and exciting new products or services on the market each year, but you want one that can sell across the country or the world. Your goal needs to be that the product you choose can grow into a large market or at least a market that will fulfill the company’s goals to make equity crowdfunding worthwhile.

Who is Behind It?

Now look at the management of the company. What are their qualifications on paper and their intangibles off of it? Do you trust this management group to carry forward the business plan they have presented? Are the right people in the right jobs for this company? Where are their weaknesses, and can they be overcome? The people behind any company are so important because even the best idea must have a solid management group behind it.

What is the Business Plan?

The business plan is critical to investigating a product or service before deciding whether to invest in startups for equity. How realistic is their goal, and have they sufficiently explored threats and challenges that might arise? Sometimes, you can ask whether they are designed to pull out more information or elaborate on what is there. You need to agree with the overall business plan, and you also need to assess the people behind the company on the thoroughness and thoughtfulness of the document.

What is the Actual Equity Crowdfunding Deal?

Finally, you need to look at the deal itself. Agreeing with exactly how much of your equity crowdfunding investment is worth and what piece of the company can be challenging. You have to understand that the person or company will be very enthusiastic about their product or service’s potential, which may mean that they inflate its future value. You need to make sure you are getting the possibility of a generous return for your money.

Equity Crowdfunding: Value

The equity crowdfunding investor needs to value the product or service in the marketplace to know what owning x percentage will mean. If 1000 units can be sold yearly, but the product has slim profit margins, the equity stake may not be worth that much. On the other hand, if many units can be sold and the profit margins are large, then an equity stake can be quite worthwhile. Sometimes, the presentation by those looking for investment shows that the equity crowdfunding they will receive will lead to more sales or better profit margins. For example, if equity crowdfunding is used to open a state-of-the-art factory can mean that profit margins rise.

Equity Crowdfunding: Return

For a well-established company judging the potential return is a little easier because the value of each percent of the company can be determined. But for a new product or service, both sides must estimate the value to decide what amount of money should be invested for a given percentage. The investors tend to go in very conservatively, while those behind the product or service have high hopes. This part can be challenging – yet, in some ways, fun.

Equity-Based Crowdfunding Summary and Our Work

Once you have a good idea of how the process works in real-time, you must choose a site or two where you will post your project or look for an investment. As we’ve said, we do not endorse any particular equity crowdfunding site here because the fit between your unique reasons for investing and hopes for a return may lead you to your specific list. We can help with that! Contact us to learn more about investing in equity crowdfunding.

The post Equity Crowdfunding: Investor Overview first appeared on Performance Psychology Group, LLC.

The bottom line is that you and the person you invested in are both hoping for the product or service to take off, and even if one side or the other is a little disappointed – you for not getting a higher percentage of them for giving up too much, you both will be quite happy anyway if things go well. This page should give you a starting point if you consider using equity crowdfunding platforms.

Our services related to equity crowdfunding platforms are more on the entrepreneur side, where we help match startups with the perfect platform for their raise. 

Equity Crowdfunding Platforms Process 

The first step in using equity crowdfunding platforms is choosing the type of product, service, or business to invest in. If unsure, you might select a considerable equity crowdfunding platform and browse. You might also read about a company seeking funding in a trade or business publication. Or, if you have made this type of investment before, you might hear directly from the business. But how do you narrow down all your potential choices if you want to invest through equity crowdfunding platforms? Here is a start:

Scalability and Growth

The first thing you need to wonder about the product or service in question is whether it is scalable. In other words, will a lot of people want it? There may be many creative and exciting new products or services each year, but you want one that can sell across the country or the world. Your goal needs to be that the product you choose can grow into a large market or at least a market that will fulfill the company’s goals.

Company Management

Now, look at the management of the company. What are their qualifications on paper and their intangibles off of it? Do you trust this management group to carry forward the business plan they have presented? Are the right people in the right jobs for this company? Where are their weaknesses, and can they be overcome? The people behind any company are so important because even the best idea must have a solid management group behind it.

The Business Plan

The business plan is critical to investigating a product or service before deciding whether to invest in startups for equity. How realistic is their goal, and have they sufficiently explored threats and challenges that might arise? Sometimes, you can ask questions, whether they are designed to pull out more information or to elaborate on what is there. You need to agree with the overall business plan, and you also need to assess the people behind the company on the thoroughness and thoughtfulness of the document.

The Equity Crowdfunding Deal

Finally, you need to look at the deal itself. Agreeing with exactly how much of your investment through equity crowdfunding platforms is worth and what piece of the company can be challenging. You have to understand that the person or company will be very enthusiastic about their product or service’s potential, which may mean that they inflate its future value. You need to make sure you are getting the possibility of a generous return for your money.

Equity Crowdfunding Platforms Rules

There are certain restrictions for equity-based crowdfunding that you should be aware of. The primary condition for equity-based crowdfunding, at least at the time of this writing, is that you have to have a certain income or net worth to invest in some types of raises – called being an “accredited investor.” This regulation is because the government wants to ensure the market is stable, and people should not invest through equity crowdfunding platforms beyond their means. Others would argue that this is unnecessary interference, given that the government does not regulate other investment forms this way.

The equity crowdfunding rules might change, so we will keep you posted!

Equity Crowdfunding Platforms Summary

Equity crowdfunding is not for everyone, as it presents a risk for the investor, company, or person seeking the investment. You may end up giving up a significant portion of your company, in essence, paying back too much money for the amount of the initial loan. Then again, your remaining equity will also be highly valued, so you may not be so upset. As an investor, equity crowdfunding is high risk and high reward. While, on the one hand, you may get no payback, you might also get quite a bit more than you otherwise would have if you chose correctly. Some investors may choose to diversify their portfolio and have only some of the money tied up in equity crowdfunding investments.

The Key to Equity Crowdfunding Platforms

The key to using equity-based crowdfunding platforms is doing your homework. As an investor, you must carefully choose the most promising investment while sometimes not reaching too high and taking too much risk. As a person with a good business plan or product, you need to find that perfect balance between offering enough equity-based crowdfunding to make things interesting for the investor and not offering so much that you end up not owning enough valuable products or services.

Investing through equity crowdfunding platforms can pay off when both sides do their homework!

If you are an entrepreneur considering using equity crowdfunding platforms, we can help connect you to the best match for free. Contact us any time.

The post Equity Crowdfunding Platforms first appeared on Performance Psychology Group, LLC.