Founders and operators face many difficult and important decisions in their line of work; and where to source financing for operations and growth is one of the most important.
Debt and equity are high-level classifiers of the various funding sources but each has a number of options, from the traditional routes like banks and financial institutions to the modern day methods like crowdfunding and peer-to-peer lending.
In this article, we compare and contrast debt versus equity including the various types, advantages, disadvantages, and examples of each.
There’s an old saying that “no one ever got fired for buying IBM.” Equivalent job security in the financial advisory industry has been built on the consistent recommendation for a portfolio allocated between stocks and bonds.
Is this still good and relevant advice for everyone? Are there any deviations or alternatives to this investing strategy? If you are interested in exploring alternative strategies and opportunities for your investments to produce growth, income, security, and more, this article is for you.
Investing in startups is essentially the art of trend spotting.
Venture capitalists place bets on the distant future – like decades into the future. Most VCs consider themselves contrarian thinkers and according to famed Benchmark VC and entrepreneur Andy Rachleff, in order to be successful you must be non-consensus and right.
In reality, there appears to be some consensus among investors, which shows up in the form of venture capital trends. In the last decade (2010s), for example, mobile app-based services like Uber, Lyft, DoorDash, Robinhood, and more were certainly a trend in both business model and venture capital investments.
Venture-backed startups make headlines, but they’re far from the norm. For the average startup, funding rounds are generally limited in frequency and conservative in the amount raised.
The truth is, most startups either get acquired, fail after fundraising, or fail to raise funding entirely. And those that successfully raise a round of funding are by no means guaranteed to raise another.
In this article, we cover the common startup funding rounds, details about each round, and an example of a startup navigating the valuations and dilution of each round.
It’s nearly impossible to look at an acorn and accurately determine whether it will establish roots and if it does how big the oak tree will be. Startup ventures are basically the little seeds (acorns) that need financial husbandry (water) to grow into large and healthy businesses (oak trees).
Companies are founded on a hypothesis for something entirely new or something existing that could be done differently (i.e. better, faster, cheaper, etc.). Either way, it takes seed money to put these hypotheses to the test and achieve successful results.
Crowdfunding was initially used as a way for artists to fund their projects and engage their audience, even when that audience was relatively small.
Kevin Kelly, author and founding editor of Wired, had the concept for crowdfunding in his essay 1,000 True Fans. Originally written in 2008, he advocated for people to focus on building relationships as a means of building business.
Today, millions of people use crowdfunding platforms to finance their projects, products, and businesses. If you’ve backed a project or creator yourself, explored the possibilities of raising money through crowdfunding, or have never even heard of crowdfunding, this article is for you.
So far in our guide, we’ve covered the most common forms of crowdfunding in chapter one, the benefits of rewards-based and equity-based crowdfunding in chapter two, and how to crowdfund successfully in chapter three.
One chapter this guide is sorely missing (as you might have anticipated given the name of our company) is what equity crowdfunding even is, so let’s get right into the question on everyone’s mind:
What Is Equity Crowdfunding?
Equity crowdfunding allows corporations to raise capital from accredited and even non-accredited investors in exchange for a percentage of equity in the company at an amount and valuation of the company’s choosing.
So how can you guarantee a successful crowdfunding campaign? Although there are no guarantees, what you can do is follow the blueprint of what has been successful many times over and avoid the pitfalls of the unsuccessful campaigns.
Crowdfunding has changed the game for creators, businesses, and even the general public. Not only can businesses use crowdfunding to tap their target audience as a source of funding, but dedicated customers can now become owners in addition to brand ambassadors.
As we discussed in our previous chapter, What Is Crowdfunding?, crowdfunding is the ability for businesses to raise small amounts of funding from a large number of sources. Depending on the type of crowdfunding platform, the investors could receive a product or service in exchange for their participation in the campaign, or they could receive interest income, equity, and more.
Even if you’ve never started a company before, you’re likely aware of how expensive business ventures can be.
You hear about companies X, Y, and Z raising round after round of financing without even a semblance of profit. Who’s willing to fund these startups and small businesses to the tune of tens or even hundreds of millions of dollars without the certainty of return?
Knowing how to find private investors for business is essential and something serial entrepreneurs innately understand. But if this is your first time considering a fundraising strategy, you’ll want to understand why private investors exist, what the various types are, and how you can find and connect with them.