We get asked this question a lot, so we thought it would be worthwhile sharing it here.
In summary, no. Equity crowdfunding (Crowd-sourced funding or CSF) does not restrict you from getting VC or other investment in later rounds.
There is plenty of advice handed out when you first decide to undertake an equity crowdfunding raise…….you must have a strong and engaged crowd of customers and supporters, a unique product that will grab attention, and a powerful marketing strategy that is going to convert those who are interested in your company into investors.
For proprietary companies, the wait is over to take advantage of the equity crowdfunding movement. An amendment to the 2017 equity crowdfunding legislation was passed in Federal Parliament last week allowing private Australian companies to raise capital through equity crowdfunding.
Alternative non-VC sources of financing are growing rapidly and giving entrepreneurs many more choices than in the past. But can they co-exist? Let’s look at a couple of different options to venture capital.
A report by PwC, ‘Women Unbound’, shows that crowdfunding is challenging embedded gender bias in the entrepreneurial and finance industry. We are seeing women-led crowdfunded campaigns reaching their target more often than campaigns led by the historically favoured men.
Having the support of the crowd is an essential factor in determining whether a company’s raise gets funded. It’s a no-brainer that companies must know how to win the crowd for a successful raise.
Equity crowdfunding has been booming overseas, and very soon retail investors in Australia will be able to invest in and support startups and high growth businesses with ideas that could change the world.
Equity crowdfunding is an exciting alternative to the more traditional sources of capital and one that has been proven in other markets like the US and UK , to have the power to change the economic landscape in favour of small business.