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The Advantages of Crowdfunding for Tech Startups

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The Advantages of Crowdfunding for Tech Startups

By Startup Valley (366 words)
Posted in Crowdfunding on October 24, 2013

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Young companies, creative entrepreneurs and technology startups have the potential to fuel vibrant economies through crowdfunding. Startup businesses will soon have increased options for raising funds from thousands of small investors to convert ideas into reality.

The JOBS Act opens new funding possibilities while maintaining the delicate balance entrepreneurs must negotiate between market forces and industry production. The SEC recently proposed regulations that will allow issuers to appeal directly for funding through social media platforms, various online sources and crowdfunding portals, like StartupValley.

Crowdfunding Empowers Creative Ideas

Crowdfunding websites help developers bypass traditional lenders and investors. Stakeholders can often water down ideas and force entrepreneurs to conform to the lowest common denominator. One of the main benefits of crowd-sourcing includes increased options for developers who don't need to qualify for loans or government grants to move forward. Additional benefits of crowdfunding include the following powerful market advantages:

  • Engage like-minded supporters on a personal level, and attract investors
  • Strengthen economic development by creating jobs
  • Utilize crowdfunding to earn capital for new businesses
  • Generate free publicity through social media and other media/online forums

Build Credibility and Generate Media Buzz

Success in raising funds and launching a crowdfunding campaign builds credibility among investors and the media, entrepreneurs will be able to set terms for outside investments that are more favorable to their creative vision. The Wall Street Journal reports that traditional funding has been drying up, but you can bypass the cash crunch without resorting to bridge loans or accepting lower valuations.

Control Your Destiny

Utilize StartUpValley to begin pitching your company or idea while waiting for the SEC to issue final guidelines of the JOBS Act. According to an article in Forbes magazine, the proof of these crowdfunding benefits depends on the final terms and conditions that the SEC chooses to publish in the federal register, but you can prepare for equity crowdfunding by promoting your business, refining goals and getting all accounts in order. Good financial records and transparency will prove important regardless of final regulations, so consult resources, i.e. SBA, for tips and tricks when designing a business plan that not only wows potential investors, but also meets regulatory guidelines. 

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