June 10, 2016
Up until recently, venture capitalists or angels seemed like the chosen ones. They had the privilege to gain from the upside of their investments in new companies. Commoners didn’t have the ability to invest and buy shares in early-stage companies. If you had $5000, no startup wanted that money—that is until equity crowdfunding came into picture. So what happens when instead of one VC, a large number of people back your startup with money? Do you lose credibility because you went with an alternative channel? Will no VC will touch you later? Let’s debunk such myths.
VC funding has long been the traditional norm for companies looking for funding. But a new and radical model has been disrupting the investment raising process and looks to revolutionize the way we think about funding as a whole—equity crowdfunding. A lot of people who are doing economically well (such as VPs and presidents at large companies) are already investing via equity crowdfunding sites.
Equity crowdfunding is the process where people invest in an early-stage unlisted company in exchange for shares in that company. A shareholder has partial ownership of a company and is entitled to a share of the profit should the company do well. But if the company fails, investors can lose some, or a ...