Crowdfunding is a booming field: in 2016, nearly 69 million euros were invested in start-ups via capital crowdfunding platforms, which is 36% more than the previous year. It is clear that this area is becoming more and more important and is becoming an alternative seriously considered by young companies wishing to strengthen their finances. In order to consolidate their capital, entrepreneurs call on a specific branch of this financing: “crowdequity”. The main objective is entrepreneurial, and consists of injecting liquidity to increase the equity of companies. How to explain this success ? What are the contributions of this alternative financing system?
Crowdequity actually brings a lot of benefits: financial, commercial and human.
Faster and more flexible financing
The primary goal is to bring liquidity to start-ups, thereby reducing the equity gap.
Indeed, crowdequity, as a new source of financing for entrepreneurs, increases the chances of consolidating equity. It is positioned as a key player in the development of start-ups, in particular by remedying the reluctance of banks and traditional private equity players to finance the needs of companies in the seed stage. Crowdfunding also makes it possible to gain speed and flexibility. Unlike time-consuming banking procedures, crowdfunding allows you to raise funds quickly (a campaign usually lasts between 60 and 90 days).
Increased communication and notoriety
One of the major strengths of this means of investment is direct contact with consumers. By participating in a crowdfunding campaign, the entrepreneur submits to the approval of Internet users: it enables the success and reception of the project to be verified in the market. In this way, crowdfunding has become a real market study or a full-scale test.
A direct relationship is thus built between the project and the Internet user: individuals take part in the project by actively participating in communication (social networks, media, etc.). The visibility and notoriety of the company are then significantly increased.
The strength of the crowd
Another element of differentiation: the creation of a community. Investors are involved in the project and give their opinion on the development of the product. Through this participatory process, the entrepreneur collects an extremely important flow of information. He thus manages to improve his concept, in order to respond as best as possible to demand.
Some platforms also offer to raise funds by canvassing Internet users, but also by addressing the Business Angels community (the Sowefund platform offers this feature!). Most Business Angels are business leaders and provide their know-how and their network. Being able to count on the advice of Business Angels is a serious asset, in particular by benefiting from the experience of these professional investors.
Crowdfunding provides entrepreneurs with a wide range of tools, allowing them to maximize their chance for development. Crowdequity, perceived as an accelerator of success and in line with the current participatory economy, seems to take a growing place in this entrepreneurial landscape.
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