Start-ups have an exciting brand new option to raise money! Regulation Crowdfunding (Reg CF), which went into effect on May 16, 2016, presents to start-ups an unprecedented equity financing opportunity. For the first time ever, companies can raise capital by selling unregistered securities online to the general public. Those start-ups that have so far not been able to secure angel investors or venture capital will find Reg CF a more accessible avenue to raise critical start-up capital. Advantages of raising capital using the Reg CF exemption compared to venture capital financing or an IPO are:
Start-ups raising money using Reg CF must do so through a FINRA-licensed crowdfunding portal or broker-dealer. Through a fundraising portal with a broader investor based, start-ups will be able to reach investors beyond their own networks.
Fundraising success is closely tied to a strategic marketing plan that uses digital experience and big data tools that drives the momentum of the crowdfunding offering.