When it comes to business, UK has managed to reserve the top position as the best entrepreneurial country in the world, and we all know that good businesses always find financing to grow and expand. However, majority of the people still believe that banks are the first stop for business financing, but banks are continuously decreasing the amount of loans they grant to small businesses.
For big companies, investing millions of dollars is not a big deal. Evidently, previous years witnessed a significant surge in the number of start-ups being funded by venture capitalist firms. But, for an average entrepreneur, the probability of receiving a venture capital investment is generally low.
Luckily, the new laws and regulations regarding equity crowdfunding have opened new doors for raising the necessary capital for small businesses. Equity crowdfunding has successfully transformed business nature by enabling investors to take equity stakes in unlisted companies. With this, businesses having a loyal customer base can raise up to $1,000,000 each year from investors. The entire transaction is carried out through Internet or web-based platforms that take a commission on the stock sale.
The equity crowdfunding mainly helps ‘Main Street’ businesses having more engaged customer but were not able to get any investment from banks. Unfortunately, angel network or venture capitalist firms seem to be less interested in investing money into businesses owned by women. However, data has revealed that majority of women investors are actively supporting women entrepreneurs through equity crowdfunding.
According to a research, women have more crowdfunding success rates than men. Why? The success of crowdfunding entirely depends on leveraging relationships and social media links, so that you can drive people’s interest and awareness in your firm. As we all are aware, women dominate social media these days and this highly increases their chances of being funded.
With equity crowdfunding, businesses can have enough capital for buying equipment, arrange the capital necessary for growth or also for strategic hiring. In fact, in certain scenarios it wins over the traditional models of financing. Today, small business owners are investing their time in learning how to leverage small early stage investments through crowdfunding so that they can negotiate to get more money from venture capitalists later. Whether you view it as a tool to provide financing or an alternate to high-cost investments, equity crowdfunding has expanded the financing options available to start-ups and small businesses across the UK.
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