Equity Financing and Crowdfunding

With equity financing, you exchange a percentage of ownership in your business for financing, much like on the TV show Shark Tank. Personal credit is NOT an issue, but equity investors are looking for a tested and proven concept and sales really help approval. You might find some investors to invest in a concept only or invention. But most will want to see that you have an operating business that’s earning money and making profits.

And expect that they’re going to want a large piece of the equity. For it to be worth their time to invest, they might want 10-60% ownership of your business. That means they’ll be taking a large part of your future earnings, something you want to consider before recruiting an investor. There are lots of websites in which you can obtain crowdfunding for your business. This type of funding gathers money from a “crowd”, or a lot of people instead of one big investor. If the crowd likes your idea, they may donate money to your project. Much of crowdfunding doesn’t need to be paid back and many investors are people you know. But if you really look into crowdfunding, you’ll find there are all types available. Some types of crowdfunding sources do want a certain percentage of return; some want a percent of equity ownership. And there are different sources and platforms for different needs, and even unique niches or industries. So make sure you find the right crowdfunding platform for you before you post a project.