Compendium spa ha avviato una campagna di equity crowdfunding con il supporto di SiamoSoci srl (2024)

FAQs

What is the downside of equity crowdfunding? ›

The cons of equity crowdfunding

Investors should be very careful about who they invest in, and do their research before investing. Another con of equity crowdfunding is that it can be very risky for investors. Unlike other forms of investment, such as stocks and bonds, equity crowdfunding is not regulated by the SEC.

Equity crowdfunding consists of selling a stake in your business to a number of investors in return for investment. The existence of equity funding is well established, with private equity, venture capital and angel investing long playing a role in developing companies.

Although equity investing is a valuable financing option for some, it's not for every company. The average success rate of a crowdfunding campaign is less than 23 percent. So, while it works for some businesses, there is still a high rate of failure.

Equity investment crowdfunding is a way to source money for a company or project by soliciting many backers, each investing a relatively small amount while typically using an online platform. In return, backers receive equity shares in the company.

Participating as an investor in equity crowdfunding is extremely risky, but it can also be a way to support innovation and become part of a community of entrepreneurs.

For investment-based crowdfunding, you will usually only get your money back (including any return on your investment) if the company floats on a stock exchange, is bought by another company or if the management buys back your shares.

Is equity crowdfunding legal? Yes. The U.S. Securities and Exchange Commission allows private companies to legally raise up to $5 million in a 12-month period through equity crowdfunding. You can raise funds in increments.

Anyone can invest in a Regulation Crowdfunding offering. Because of the risks involved with this type of investing, however, you are limited in how much you can invest during any 12-month period in these transactions. The limitation on how much you can invest depends on your net worth and annual income.

For a typical successful crowdfunding campaign, your total costs are likely to come out in the range of say 9% to 11% of the amount raised. Campaigns on the smaller side of things could have a cost of capital a bit higher than that, but of course, the actual amount in hard currency would be lower.

Depending on the type of crowdfunding, you could potentially earn returns on your investment via equity (growth in share value) or interest (if using P2P lending), or you might simply receive other perks or benefits.

What is the average return on equity crowdfunding? ›

To sum things up, according to past and current data on annual returns, we have seen the following numbers: Regulation D equity crowdfunding – 14.4%-41% (with Seedinvest and Wefunder as only data points) Seedrs Equity Crowdfunding (UK) – 12.9% non-tax-adjusted, 18.4% tax-adjusted. Public markets – 10.2%

Aside from that, equity crowdfunding doesn't require a substantial amount of money to get started. Depending on how large the funding round is that a startup is seeking, you may be able to invest as little as $1,000. That effectively levels the playing field between accredited and non-accredited investors.

Get the scoop on creating a kickass pitch here and building out your entire raise strategy here. The minimum campaign requires you to raise at least $50,000. If you're raising with Regulation Crowdfunding, you can raise up to $5 million.

Raise Money Quickly

Crowdfunding platforms have a limit, often 60 days, for a crowdfunding campaign. Most successful campaigns happen within even shorter timespans, 30 to 40 days. This is a much faster way to raise money than through series funding, which takes about 12 to 18 months just for Series A funding.

Scammers are by far the biggest con of the crowdfunding space. There are so many projects that have a successful raise, but do not pull through with the execution of the project. As a result, a lot of people have become jaded by the lack of follow through and reduced the trust between creators and early adopters.