Equity crowdfunding gives founders several advantages over traditional financial and capital raising. It enables a venture to raise capital from mainstream and sophisticated investors through the sale of securities in a private company.
Securities can be in the form of equity, debt, revenue share and convertible note that give participants skin in the game. Investors can get a return on investment if the company turns a profit and/or exits to an acquirer.
Moreover, startups that get popular crowd support can gain traction and generate buzz in the marketplace. In the age of social media, validation distinguishes an innovation or product amidst a sea of products and services available online. And that can be extremely valuable because on the web, attention is monetizable.
Equity crowdfunding shares similarities with the decentralized finance (DeFi) movement that is sweeping across the $1 trillion cryptocurrency market. Small investors gain access to investing opportunities with both small and large ventures. These capital-raising methods empower Main Street investors to financially support millions of small businesses who can’t otherwise obtain a bank loan or reach large financiers or institutions.
Making Small Investing Easy
With equity crowdfunding, 30% involve sale of common stock, 19% are debt, and the rest are a combination of preferred stock, revenue share, convertible note and others, according to data from StartEnginge.com.
One DeFi blockchain venture offers a convenient, fast and affordable way for operators to raise funds for their business.
“We’re allowing anyone to get world-class software for raising funds,” says Mislav Javor, founder of AMPnet.io, a platform for equity crowdfunding campaigns. “Our blockchain-secured tools enable proprietors to raise money with U.S. dollars, Euros, USD and cryptocurrencies. Moreover, AMPnet is integrated with KYC and AML compliance, as well as tax reporting.”
By providing entrepreneurs their own capital-raising platform, AMPnet simplifies the process for business owners. The process also lowers the cost and red tape for small investors. Finally, it solves the problem of current platforms only funding low-risk, low-yield projects.
Blockchain Can Help Companies to Raise Capital
With AMPnet, a business owner can quickly create a crowd investment platform backed by a legal entity in a few minutes. Such a capability enables anyone to raise funds for their venture with less friction. And web access makes a project easily shareable with potential investors.
The team’s goal is to create a simple, fast and low-cost way to fund new ventures through the crowd.
With the AMPnet platform, entrepreneurs can raise money in various denominations including euros, U.S. dollars and cryptocurrencies. Aside from giving businesses backing from a legal entity, the platform is also integrated with know-your-customer (KYC) and anti-money laundering (AML) compliance, automated divided payment system, tax reporting generation and more.
Legal matters, documentation and compliance are secured by blockchain without requiring users to possess technical know-how of blockchain. (Few people do.)
In short, the firm’s blockchain-powered protocol connects thousands of platforms from hundreds of jurisdictions, and enables the funding of dozens of asset classes. AMPnet is also tokenizing assets. The platform is known as APX (Asset Platform and eXchange) whose assets are standardized and tokenized. The assets contained in the platform can be used for loans, issuing non-fungible tokens (NFTs) or used in IoT/Automation protocols.
Various players in the APX ecosystem can provide services such as risk analysis, document management, due diligence and more. And the ecosystem is connected and governed by the APX governance token.
Small businesses that have trouble obtaining a bank loan can obtain crowd capital via blockchain. Think startups such as bars, clubs, restaurants, merchant shops, local eateries, neighborhood service providers and similar establishments. These types of businesses have a great need to leverage expertise, legal compliance and obtain funds seamlessly and with less friction.
These small businesses, of which there are many around the world, can utilize AMPnet’s platform to simplify the selling of shares and making the process easy and low cost. Investors will appreciate the convenience and transparency of such a platform. For example, family, friends and fans who trust the mission and who support the cause can conveniently become minority shareholders and turn the vision into reality.
Even high-risk businesses can raise crowd capital by connecting with investors who support experimental ventures that have potentially lucrative upsides. There are investors in the marketplace who possess an appetite for risk. And too many ventures that would have succeeded fail without getting off the ground because they can’t connect with appropriate would-be investors who share a visionary’s propensity for risk. An all-in-one platform that digitizes the process can connect both parties, even people who are separated by geography.
As mentioned above, entrepreneurs can raise funds denominated based in their jurisdiction (i.e., euros or dollars) and comply with KYC / AML. A simplified process also means that founders can access capital from the crowd in days instead of weeks or even months.
For investors, the streamlined process leads to lower costs of fundraising, which means the return on investment (ROI) can continue to be viable. Whereas a more expensive process can kill the ROI and potentially be a death knell for a local enterprise.
Blockchain, crowd investing and streamlined compliance can bring financing to thousands of ventures worldwide. Entrepreneurs with great ideas can be given a chance to prove doubters wrong and make their vision a reality. Which leads to new products and services being introduced to the marketplace.
As the world’s richest man says ( Jeff Bezos) innovators must be willing to be misunderstood. Crowd investing funds more innovators and, therefore, it helps to reshape the global economy.