Startup Fundings Using Services such as StartEngine, Wefunder and Republic
You've reached the point in your business where you need to raise cash, and you've carefully considered your alternatives for how to go about doing so. The time-consuming process of obtaining bank loans or venture capital investments – as well as the loss of control over your firm that comes with those alternatives – is not something you are interested in undertaking. You've taken the choice to launch an equity crowd funding campaign to raise funds for your company. Congratulations! So, what do you do now?
The fact that there are so many different platforms to select from might be a bit daunting. Carry out your study. Consider it akin to the process of purchasing a home. Spend some time walking around each station and imagining your company's presence there. Does it appear to be a good match? What advantages will you receive, and how much will it cost you, are the questions. If you take a look at the most successful campaigns that are taking place across many platforms, you can learn a lot not just about what these efforts have in common, but you can also learn a lot about how the platform may be contributing to the campaign's success. In order to assist you in getting started, here is three of the most popular equity crowd funding sites, listed in no particular order:
A summary of the pitch: StartEngine is one of the largest and most well-known equity crowdfunding platforms in the world. Its affiliation with Shark Tank's Kevin O'Leary (aka Mr. Wonderful), who serves as a strategic advisor and the platform's highly prominent face, has unquestionably boosted its visibility in the marketplace. StartEngine has a large investor community and goes a step further by giving incentives like as the Owner's Bonus to encourage investors to participate in several campaigns at the same time. Because of its scale, StartEngine is able to provide comprehensive marketing and advertising assistance, including its own digital ad agency, which is made available to firms using the platform.
This platform distinguishes itself from the competition by the use of Start Engine Secondary, an alternative trading system that allows investors to trade startup investments in the same way they would trade stocks on the stock market. This approach provides investors with far greater flexibility since, rather than waiting the customary 5+ years for a liquidity event, they may sell their interests in startups to other investors through this secondary market. It increases the attractiveness of StartEngine to investors, which in turn increases the attractiveness of StartEngine to startups.
More than $350 million has been raised by more than 500,000 investors in more than 500 successful transactions.
Start Engine fees:
For Regulation Crowdfunding offers, StartEngine charges a fee of 7 percent of the total money raised, plus an extra 2 percent of the amount raised in equity, as well as $10K in deferred revenue, which is recovered after the offering is completed. The charge might range from 7 percent to 12 percent, depending on the form of investing and any fees that are connected with that kind of investment.
The pitch: Wefunder is a non-profit organization whose motto is “We're here to repair capitalism.” They promote the benefit for investors of helping entrepreneurs fulfil their ambitions, as well as creating new employment and reviving the economy. Their fundraising strength is also marketed, claiming to be “the greatest funding gateway by dollars raised, number of businesses funded, investors and most follow-on investment by venture capitalists” ($5 billion raised).
Wefunder has been active in equity crowdfunding since its inception, helping to pass the laws that authorized it in 2012. They claim to pick firms carefully, which boosts their numbers and gives investors trust in the companies listed on their platform. Wefunder emphasizes their team's experience in technology, not finance.
900,000+ investors raised $292 million in 1,524 transactions.
Wefunder charges 7.5 percent of the overall fundraising for Reg CF. They don't impose any extra fees and will match any better price. They charge $375K for Reg A+, or 7.5 percent of a $5M raise.
Like WeFunder, Republic touts itself as an investing platform that allows “ordinary individuals, not just a few affluent authorised investors,” to hold a part in businesses. Unlike many equity CF platforms, Republic lets users to spend as little as $10 or as much as $100,000. The team has experience in angel investment, venture capital, and entrepreneurship.
700,000+ investors raised $200 million in 250+ transactions.
Republic only collects fees if the firm meets its financing target. The price is 6% in cash and 2% as a Crowd Safe.
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