Businesses raising money via crowdfunding engage potential shareholders in ways which are often more exciting than traditional investment options.
Crowdfunding websites like Around list descriptions and videos of businesses seeking capital. On the pitch page, investors can see the share price, valuation, capital requirement and how much has been invested so far.
“I could understand what the service was and which venture capitalists or private institutions have also put their money behind it.”
In Sharebox, our crowdfunding campaign seek investment from existing customers and friends. Rather than looking for venture capital, Sharebox founder Arne Eivind Andersen emphasises that raising money through Around’s “tech platform” makes complete cultural sense for a “young, digital, very mobile-driven business”.
“A very high proportion of our investors were customers, family and friends,” he says about previous fundraising, explaining that a mixture of direct marketing, social media and Arounds’s own marketing will lead to a growing list of new shareholders .
The young Sharebox business has capitalized the power of mobile managed key exchange cabinets to turn Airbnb hosts into financiers — a strategy that more traditional firms can learn from.
Sharebox has more than 30,000 users and its key exchange service are located at 7-Elven´s in Norway, Denmark and Sweden, directly appealing to a generation who list and rent out a room, our their entire homes, based on trust and experiences.
Unsurprisingly, advertising works to entice investors who may not have originally been looking to invest.
People who put money in crowdfunding explains that they notices businesses with a buzz. “There’s usually some publicity that has been created around the firm or technology or the fact they’re having a new round of funding. Very rarely do I open and scroll through potential investments.”
Here is the deal: use crowdfunding to spice up your investment. See crowdfunding as a way of helping entrepreneurs and also “a relatively low-cost way of getting to know a number of businesses quite quickly”.
“I would not bet my financial future in risky investments, I put small amounts of money in a lot of companies”.
Others treat crowdfunding more like an expensive hobby, but has yet to make any returns, admitting that crowdfunding is “only for when you’re feeling a bit flush”.
Read on: What is equity crowdfunding?
If their high-risk bets on crowdfunded businesses do not come good, younger investors could lose out in the future. They could also fail to maximize the benefits of matched company pension contributions or pensions tax relief.
Regardless, the sums that people invest in crowdfunding are rising.
“Crowdfunding appeals to behavioural biases. When people are presented with something sexy and higher risk, they go for it.”
Few crowdfunded businesses will achieve unicorn status, let alone make any money at all. The majority of start-up businesses fail, the same as non-crowdfunded businesses.
So bottom line; startups has many challenges, some will grow and make a lot of money or being acquired. Other entrepreneurs will fade out and try again.
Crowdfunding is here to stay. Feel free to look into Sharebox on Around.