Crowdfunding is not a new concept, but in 2015, the SEC finalized the rules and regulations to allow companies to offer and sell its securities through the use of crowdfunding. Now, everyday citizens and non-accredited investors can invest in early-stage companies.
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Crowdfunding is one of 8 types of concept stage funding resources.
Entrepreneurs often seek funding to take their business idea to the next level. However, one unique aspect gained from successfully crowdfunding your campaign is the validation of your concept. When presenting your concept online, you lose the ability to “pitch” your idea in person. Your startup idea must be able to stand on its own solely through text and images (and video if you can afford it). So while crowdfunding can seem like an “easy” option, it doesn’t provide the mentorship and advice that Accelerators and Investors can provide.
That’s not to say you shouldn’t be crowdfunding your startup. As an entrepreneur, you must carefully consider the needs of your venture. If you think you have a solid concept that requires little to no additional mentorship, this is an appealing option. If you’re searching for experienced advisors to help guide and validate your concept, consider joining an Accelerator program or participating in pitches to angel investors. Not only could you receive funding, but also gain invaluable advice and possibly create connections in the industry.
Infographic edited by Rebecca Cox