Capital is what allows you to expand the business, hire more employees and bankroll the next steps in your growth strategy. But where do you find this funding?
The problem of accessing additional capital
The traditional routes to funding – sources like bank loans, government grants and private investment – can be difficult to access, especially as a new business with limited trading history. As a result, more alternative funding channels are popping up.
Crowdfunding through equity platforms is one such route to funding. Could it be a viable route for your small business or startup?
What is equity crowdfunding?
Equity crowdfunding uses online platforms to connect private companies directly with everyday and institutional investors.
Instead of borrowing money from banks or issuing debt, your business can sell fractional ownership shares to a wide public audience through a regulated digital portal. It’s a simple way for people to invest in your business, while providing the funding for you to take your next growth steps.
Globally, platforms like Snowball, CrowdCube and StartEngine offer ways to raise capital by selling up fractional shares and rewarding your investors with part ownership of your business.
What are the benefits of an equity platform for your business?
Equity platforms unlock growth capital in an important way – by raising capital through equity crowdfunding, you don’t create debt or weigh yourself down with monthly loan repayments.
And the benefits are not just financial. Raising publicly can also help you turn loyal customers into active brand ambassadors. As fractional owners and advocates for your business idea, your investors can post on their socials, spread the word about your offering and raise awareness of the company within your chosen market.
As an additional bonus, many equity crowdfunding platforms offer tools to help manage communication with your customer/investor base.
Funding your growth through equity crowdfunding
If you’re having trouble raising capital through the traditional funding routes, it’s worth speaking to an investment specialist and reviewing the pros and cons of equity crowdfunding.
Benefits of crowdfunding can include:
- Access to debt-free growth capital: you can access funds without triggering monthly debt repayments, personal guarantees or putting up property as collateral.
- Turn customers into shareholder advocates: you can convert your most passionate customers into fractional shareholders and loyal brand advocates.
- Increase brand awareness: raising capital through equity crowdfunding can also help to increase awareness of your brand, helping you find new partners and investment.
As your accountant, we can’t offer investment advice. But we can connect you with investment professionals and brokers who can offer impartial, objective advice on funding routes.