1. Why should my company raise capital through crowdfunding?
If you have exhausted your network of friends and family asking for money, if banks are giving you the runaround, if you don’t know any angel investors or VCs, then investment crowdfunding might be a very good option for raising capital. Investment crowdfunding gives you a clear path for raising capital from your customer and fans.
2. How much money can my company raise through investment crowdfunding?
By law, you can raise up to $5 million per year. The average company doing investment crowdfunding—and there have been thousands of them—raises over $300,000.
3. Can a nonprofit or cooperative raise capital through crowdfunding?
Yes, but you have to raise money in a way that’s consistent with the company character. For example, a nonprofit cannot issue stock, but it can borrow. A cooperative cannot allow anyone to become a member, but it can create a special class of preferred (nonvoting) shareholders.
4. Can I advertise?
Yes. Once you officially launch a crowdfunding campaign, you may advertise the offering far and wide. That includes promoting through e-mails, public events, Facebook, and Twitter.
5. Where can I launch a crowdfunding campaign?
Through one of eighty-plus federally licensed portals. (You can find the complete list here.)
6. How long does it take to launch a crowdfunding campaign?
Depending on your readiness, it can take anything from weeks to months.
7. How do I know if I’m ready to launch a crowdfunding campaign?
Take our survey on ARE YOUR READY FOR CROWDFUNDING? If you score well, go for it. Chances are good you’ll need help with something—getting your books in order, building a fan base through social media or e-mail, preparing a video on your company, etc. We also are preparing technical resources that to help you improve your readiness for crowdfunding and introduce you to the right crowdfunding platform for your needs.
8. How long does a crowdfunding campaign last?
It can last up to a year, but most companies set a shorter timeframe.
9. What if I raise less than the campaign goal?
Most crowdfunding campaigns set minimum and maximum goals. If you don’t reach your minimum, you must return money to investors. If that happens, it’s worth figuring out what did not work well and fixing the problem. You can always try again.
10. How expensive is it to carry out a crowdfunding campaign?
Each portal has a slightly different fee structure. Most charge a little money up front ($500-1,000), and then take a percentage (6-9%) of the total raise if it’s successful. Sometimes that fee can be paid in securities (like stock) rather than cash. There may be other expenses you face getting ready for a campaign. For example, if your accounts are not in order, you may need to hire an accountant. If you don’t have a good network of fan, you’ll want to invest in building that up.
If you have exhausted your network of friends and family asking for money, if banks are giving you the runaround, if you don’t know any angel investors or VCs, then investment crowdfunding might be a very good option for raising capital. Investment crowdfunding gives you a clear path for raising capital from your customer and fans.
2. How much money can my company raise through investment crowdfunding?
By law, you can raise up to $5 million per year. The average company doing investment crowdfunding—and there have been thousands of them—raises over $300,000.
3. Can a nonprofit or cooperative raise capital through crowdfunding?
Yes, but you have to raise money in a way that’s consistent with the company character. For example, a nonprofit cannot issue stock, but it can borrow. A cooperative cannot allow anyone to become a member, but it can create a special class of preferred (nonvoting) shareholders.
4. Can I advertise?
Yes. Once you officially launch a crowdfunding campaign, you may advertise the offering far and wide. That includes promoting through e-mails, public events, Facebook, and Twitter.
5. Where can I launch a crowdfunding campaign?
Through one of eighty-plus federally licensed portals. (You can find the complete list here.)
6. How long does it take to launch a crowdfunding campaign?
Depending on your readiness, it can take anything from weeks to months.
7. How do I know if I’m ready to launch a crowdfunding campaign?
Take our survey on ARE YOUR READY FOR CROWDFUNDING? If you score well, go for it. Chances are good you’ll need help with something—getting your books in order, building a fan base through social media or e-mail, preparing a video on your company, etc. We also are preparing technical resources that to help you improve your readiness for crowdfunding and introduce you to the right crowdfunding platform for your needs.
8. How long does a crowdfunding campaign last?
It can last up to a year, but most companies set a shorter timeframe.
9. What if I raise less than the campaign goal?
Most crowdfunding campaigns set minimum and maximum goals. If you don’t reach your minimum, you must return money to investors. If that happens, it’s worth figuring out what did not work well and fixing the problem. You can always try again.
10. How expensive is it to carry out a crowdfunding campaign?
Each portal has a slightly different fee structure. Most charge a little money up front ($500-1,000), and then take a percentage (6-9%) of the total raise if it’s successful. Sometimes that fee can be paid in securities (like stock) rather than cash. There may be other expenses you face getting ready for a campaign. For example, if your accounts are not in order, you may need to hire an accountant. If you don’t have a good network of fan, you’ll want to invest in building that up.