What it means to raise money through investment crowdfunding
The NC PACES Act affords business owners an option that can work with, or independently of, traditional funding models including grants, bank loans, venture capital, or angel investments. However, the greatest benefits to business owners (called "issuers" once they make an offering available) who successfully raise money through investment crowdfunding include:
1. Control: Writing your own terms and offering instead of bowing to those of traditional sources of capital.
2. Cost: Raising money cost-efficiently compared to the relative cost (out-of-pocket, equity, time) of traditional funding mechanisms.
3. Exposure: Connecting with your crowd to achieve your funding goals while creating a network of potential customers and advocates.
Evaluating Your 4Ms
Developing an Offering
Investors, both accredited and non-accredited, typically invest with emotion. We’re certainly not saying that business plans and financial projections aren’t important, but affinity based, geographically relevant, mission driven offerings cater to specific people. And those people, that identify with your mission, are the potential investors you need to identify as your “crowd.”
Whether your business is a start-up or established entity, savvy investors see great value in compelling management teams. Investing is always risky but even the most knowledgeable institutions drive dollars to companies with the most engaged leadership. “Everyday” investors are no different so focus on featuring the human capital your company already possesses.
Ideas are a dime a dozen but good ones – paradigm shifting, ground breaking, unicorns – are validated by their performance in new or emerging markets. Investors need to understand the market in which you are competing and how your product or service is going to be successful. Make sure potential investors understand your market opportunity so they’re inspired to act.
If you compare the chance of success of any investment with the sheer value of investment dollars in circulation, it’s clear that a monetary return is not the only reason people invest. Interesting perks, supporting local entrepreneurs, propagating heart-felt missions, and the potential of making a few bucks are what make the investment crowdfunding opportunity so unique.
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