Equity Crowdfunding Platform - Can a Private Limited Company Use Crowdfunding?

Equity crowdfunding platforms (called equity-based crowdfunding) allow businesses to raise money from retail investors by issuing them an ownership/equity stake in the company.

The equity crowdfunding platform should solve these challenges and permit the best use of all benefits individuals can see when investing in businesses.

As with public companies, private companies also require funding for various reasons. For example, businesses typically require the most financing during their startup and growth phases. In addition, they may need extra funds for new research and development, equipment, or inventory.

Equity crowdfunding platforms are essential for a new business to start and an existing business to grow. However, it is difficult for private companies to raise capital like public companies, for example, by issuing stock.

Private companies have various funding options, each with different requirements. All these funding sources through the life cycle of a private company include friends and family, private equity, and bank loans.

UFUND is a platform that provides Decentralized Finance (DeFi) and asset tokenization for SMBs. They offer a fair and accessible platform enabled by blockchain technology, making it easy for anyone to participate in funding projects they believe in.

Equity Crowdfunding Platform - An Overview of Equity Crowdfunding

Investing in a privately-owned company is possible through equity crowdfunding. A company or entrepreneur, typically a startup, will provide assets in exchange for public investment through an equity crowdfunding platform.

It is common for investors to invest from the purchase of shares of a company, which appreciate as the company prospers and grows, providing them with a return on their investment.

Why Is Equity Crowdfunding Platform Important for Private Companies?

If you’ve ever tried to establish a business, you know how difficult it is to raise funds to start your company. In the past, you needed a venture capitalist or an angel investor to raise money from members of the public.

However, the JOBS Act of 2012 allows private companies to raise capital from regular citizens. On the other hand, the equity crowdfunding platform allows regular investors to participate at the beginning of a business venture.

Even the world’s most successful companies started as startups, and equity crowdfunding allows investors to invest right at the start of a company’s future.

Trends in Equity Crowdfunding Platform

The trend of equity crowdfunding stems from the need for consumer protection. When investing in publicly listed companies, you’re putting your money into a well-established, well-regulated company, but this isn’t always the case with equity crowdfunding.

However, becoming a publicly listed company requires a lot of funds, which is impossible for most startups and small enterprises.

Rather than that, they resort to new sources of finance like equity crowdfunding, which, while providing beautiful possibilities for average investors, may also expose them to significant risk.

Traditionally, UFUND is a well-known crowdfunding platform for having the resources and skills to handle the risk of investing in a business. However, excluding the average investor from these alternatives has been a two-tier system, where sophisticated investors cannot participate in new startups.

What Are the Advantages of the Equity Crowdfunding platform?

There are probably a lot of potential negative consequences and restrictions associated with Crowdfunding, which makes you wonder why anyone would do it. However, despite the disadvantages described above, Crowdfunding may offer other benefits for companies, including the following:

Control - Unlike accepting significant investments from some investors, entrepreneurs can set the terms of their offering instead of negotiating them.

Validation - By using a crowdfunding campaign, your company can gain momentum and show that it can raise funds.

Community - In addition to providing capital, equity crowdfunding investors known as brand ambassadors, reliable customers, and active members of organic communities invest in your success.

Other options are still available - While securities laws are complicated in this area, you can raise money from the crowd when figuring out traditional financing.

How to Get Equity Crowdfunding Platform for Your Private Limited Company?

● A rapidly growing market like equity-based Crowdfunding offers a wide selection of platforms. However, each has its own set of benefits, so it’s crucial to do your homework and choose the platform that’ll be the best fit for your company.

● The next most important step is applying for the selected platform. These platforms properly review your application to safeguard the investors. You must present your firm in a favorable light and propose a business plan that will interest many of the platform's investors.

● When you join a platform, you can set your terms. However, the most significant advantage of equity crowdfunding is that you have complete control over your terms!

● Lastly, you must ensure compliance by having all the legal documents and passing the financial test. Then, when your company is in good shape, you can raise money through UFUND in just a few weeks with a few expenses.

So, Do You Think Crowdfunding Is Right for You?

Startups aren’t easy to build, but they become much more difficult without capital. Before the changes to legislation, private companies had few options to raise funds. However, equity crowdfunding platforms now allow startups to choose from thousands of investors seeking the next great thing!

Equity crowdfunding platforms like equity crowdfunding promote the concept of crowdfunding to the public. These platforms allow investors to invest in a company's shares or equity and then accumulate losses or earn profits on their investment by buying and selling securities. In addition to raising large amounts of capital, this is also an excellent opportunity to enhance your marketing efforts by creating a lot of buzz around your brand.

UFUND provides a safe and easy way to invest in early-stage companies. It has a built-in trust mechanism to protect the investor and startup owner. Have you used UFUND? What was your experience? Let us know!