Established businesses have a network and the marketing know-how and can use that to raise funding from their crowd. Richard Swart (@richardswart), global crowdfunding and alternative finance researcher at the University of California, says, “Corporations are realising there is a lot of social engagement on crowdfunding platforms that can drive corporate innovation and offer alternatives to focus groups.”
Call it Equity Crowdfunding 2.0 established businesses are using alternative financing as a way to launch new products, paid for by a built-in customer base before they hit the production line.
Equity crowdfunding comes in handy when traditional funders say no. Paul Futon, held the top positions at Compaq and 3Com, worked as an entrepreneur-in-residence at the Mayfield Fund before founding a software company that was later sold to Cisco, but he decided to go down the equity crowdfunding route with his new product Wave. His reasoning was that the venture capitalist firms were not interested in hardware or entertainment so he campaigned to raise nearly £50,000 through crowdfunding.
The funding a business gets through equity crowdfunding has a lot less strings attached. Whether that’s creative, strategic, or financial control over their products, process and management.
The appeal of equity crowdfunding is not limited to raising funds, it’s a way for businesses to gain brand ambassadors. Having a crowd of people with a vested interest in your success can have its benefits!
Equity crowdfunding is a fantastic way to get your crowd engaged. Stain Westlake (@stainwestlake), director of policy and research at Nesta discusses BrewDog’s Equity for Punks campaign, “This allows them to go out to people who really value the BrewDog brand and pitch to them. Being able to appeal to a constituency of investors who are really into the product is very important.”
If you’d like to find out more about equity crowdfunding for your established business email us on Team@ShareIn.com or call us on 0131 641 0018.