Study Shows Crowdfunding $$ Can Grow on Trees
2 min read
EquityNet.com, a crowdfunding platform that allows entrepreneurs to boost money from accredited investors, just released findings from the six-year study of the transactions (1,000 completed deals) and also the findings are extremely interesting. For those who have considered raising money and question if your small business is fundable and under what terms, continue reading.
*Consumer and business product/service information mill popular, comprising over 40% of equity crowdfunding activity. They are industries formerly underserved by traditional investment capital.
*Over fifty percent from the completed deals are companies in the center of the U.S., and not the coasts. Internet, it’s not necessary to maintain the Alley (NY) or even the Valley (CA) to obtain funded.
*The fundraiser amounts aren’t that big. Around 50% of companies which use equity crowdfunding seek under $500,000 in investment finance.
*Valuations are low and vary broadly in equity crowdfunding with roughly 40% of pre-money valuations under $1,000,000.
*Investors own 20-30% of the organization in nearly all deals. The cheapest raises (under $100,000) brought towards the greatest investor possession, as you would expect, having a median of 33%. For investment amounts between $100,000 and $500,000, the median investor possession was 20%.
*The deals were closed pretty fast. Two several weeks was the median period of a fundraiser round based on Judd Hollas, Chief executive officer of EquityNet.
*Most companies (70%) don’t have revenue, but 75% of individuals zero revenue companies be prepared to generate revenue within their current fiscal year. This means that almost all the companies are initial phase companies and also at the revenue-inflection point.
*Couple of (15%) companies are presently lucrative, and 90% from the remainder predict they’re lucrative in 3 years or fewer.
*Only 10 % companies have patents or patent applications for proprietary technology indicating that companies don’t have to have ip that need considering fundable.
