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A Guide to Equity Crowdfunding for Your Tech Startup

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A Guide to Equity Crowdfunding for Your Tech Startup

By Startup Valley (445 words)
Posted in Equity Crowdfunding on May 22, 2014

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In the (hopefully) near future, non-accredited individuals who wish to invest in a startup will have the opportunity to participate in a new way of investing in exchange for equity in a company, better known as equity crowdfunding. In the past, only those who had access to large amounts of capital were in a position to invest using rules from the JOBS Act. Because of the passage of the JOBS Act, most notably Title III, a more diverse group of people will be able to partake in equity crowdfunding as well.New investors now need to wait for the SEC to put new regulations into effect.

How to Obtain Financing for a New Tech Startup

Although the SEC has not finalized new regulations yet, you can still introduce your ideas right now. StartupValley is a platform where you can list your business and generate interest in your products or services. Potential investors will read your company’s profile and determine whether or not they would like to supply money when Title III goes live. In exchange for investments,investors will receive shared equity in your startup.

The Advantages of Equity Crowdfunding

Equity crowdfunding can be a powerful tool to help stimulate the economy and help create job growth.

This type of investing offers entrepreneurs more than just a loan. When hopeful business owners receive funds from an equity crowdfunding source, they also join a community that can offer them business advice when they needed. Furthermore, they gain extremely valuable exposure for their ideas that they would not have been able to obtain through traditional sources.

Many conventional banks consider lending, for a new business, to be a high-risk proposition. For this reason, they require that new entrepreneurs have a very good credit rating before they will grant a loan and often must be in business for at least two years. Equity crowdfunding makes financing a new business possible for those who do not meet the bank requirements.

Many investors will be contributing to the new company where the dollars put forth by each individual person will be much lower than for a bank because many people will invest to create the large sum. It eliminates the need to engage in a long application process, and it doesn’t require that you undergo a credit check. If you are in need of startup capital for your new tech startup, equity crowdfunding could be a great option for you.

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