Crowdfunding is a way to raise capital from a group on individual investors (the crowd) through the sale of securites. This can include shares of equity in your corporation, a convertible note, revenue share and other methods in a private company.

There are two types of crowdfunding campaigns. Kickstarter rewards donors with a discounted presale version of the product being developed. They receive no equity in your business. With equity crowdfunding, investors get a portion of your company’s equity, meaning they are a partial owner. Equity-based crowdfunding is not for the small business owner who is not looking to “go big” and sell out. These investors are looking for the big-win by selling your business to a larger firm, or going public. For smaller LLC companies who are looking for a profit-share partner, a service such as Join My LLC let individuals help you reach your funding goal in exchange for shares of membership in your LLC. Yes, they will also be part owners in your LLC, but will be content in letting you keep running the business. Join My LLC also has another option for investors where they receive a royalty on all products or services sold up to a predefined amount. This is one of the approaches often proposed by Kevin O’Leary on Shark Tank.

There is another form of “crowdfunding”, that being peer-to-peer lending. With these platforms, individual investors lend your business money in exchange for interest on the money you borrow, and receive no equity. There are a variety of peer-based lending platforms, each with a special niche, including best rates, best for borrowers with a limited credit history, best for those with an established credit history, and for small businesses. Your rate and terms will be decided by a variety of factors. 

To learn more, ask your associate for our free report – “Crowdfunding for Your Business“. It will provide you with all the information you need to evaluate if this type of funding works for you.

Scroll to Top
Scroll to Top