The Power of Many - Unleashing the Potential of Equity Crowdfunding

Jul 26, 2023

In the realm of entrepreneurship, raising funds often feels like a daunting quest. You have a brilliant business that you are passionate about, but to turn it into reality requires capital. Traditional routes might lead you down the path of seeking investment from a small number of large investors or venture capitalists, but in recent years an alternative approach has emerged: equity crowdfunding. This is about harnessing the collective financial power and support of many smaller investors, rather than depending on just a few.


So why consider equity crowdfunding?

Especially if you are looking to raise under £1m and already have some significant traction or revenue generation.


Firstly, let’s address what equity crowdfunding entails: It essentially involves selling part ownership or shares in your business to multiple investors in exchange for their cash injection. Think Dragons’ Den, but instead of five dragons sitting before you, there are potentially hundreds or even thousands!


Imagine the impact this could have not only on your pocketbook but also on your brand awareness and customer loyalty. Each investor becomes an ambassador for your company; they’re personally invested (literally) in seeing you succeed. As Oscar Wilde wisely noted, “There is only one thing in life worse than being talked about, and that is not being talked about.”  With each new investor comes their network too - expanding your reach exponentially.


But managing hundreds or thousands of shareholders sounds like an administrative nightmare doesn’t it? This is where nominee structures come into play – simplifying shareholder management without losing out on any benefits offered by the UK government tax schemes SEIS (Seed Enterprise Investment Scheme) and EIS (Enterprise Investment Scheme). A nominee structure means all small shareholders are grouped together under one legal entity – so while they individually benefit from potential profit allocation and tax reliefs linked with SEIS & EIS schemes, for you as an entrepreneur it means dealing with just one unified representative.


Equity crowdfunding platforms such as Seedrs offer these kinds of nominee structures making them an increasingly attractive option for businesses across Europe looking to raise investment efficiently whilst retaining focus on their core operations.


Moreover, having a diverse group of investors can bring more than just financial benefits; drawing from differing perspectives can introduce fresh insights and ideas that may otherwise never enter a boardroom filled with conventional large-scale investors who tend to be cut from similar cloth.


Finally yet importantly- remember this isn’t charity; every investor expects returns at some point. But with careful planning around exit strategies whether through trade sale or Initial Public Offering (IPO), equity crowdfunding offers both entrepreneurs and investors exciting opportunities in today’s digital age.


Just as many hands make light work; many wallets make hefty investments! So open up those doors wide–your potential investors await! Here’s to achieving great things together.


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