{"id":2848,"date":"2020-03-23T17:51:02","date_gmt":"2020-03-23T17:51:02","guid":{"rendered":"http:\/\/localhost\/2020\/swoopMW20\/?post_type=knowledge-hub&p=2848"},"modified":"2023-11-29T15:01:48","modified_gmt":"2023-11-29T15:01:48","slug":"equity-crowdfunding","status":"publish","type":"knowledge-hub","link":"https:\/\/swoopfunding.com\/za\/knowledge-hub\/equity-crowdfunding\/","title":{"rendered":"Equity crowdfunding"},"content":{"rendered":"\n
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\n \n What is Equity crowdfunding? <\/a>\n <\/h5>\n <\/div>\n\n
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Equity crowdfunding is a type of\u00a0equity finance<\/a>\u00a0whereby people (\u2018the crowd\u2019) invest in an early-stage unlisted company, in exchange for shares (equity) in that company. Individual investors thus become shareholders and stand to profit if the business does well \u2013 they might also lose some or all of their investment. Equity crowdfunding usually takes place over an online platform.<\/p>\n <\/div>\n <\/div>\n <\/div>\n

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\n \n Why choose Equity crowdfunding? <\/a>\n <\/h5>\n <\/div>\n\n
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With a good crowdfunding campaign, you can access potentially millions of people via one of the many crowdfunding sites.<\/p>\n <\/div>\n <\/div>\n <\/div>\n

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\n \n Have you also considered? <\/a>\n <\/h5>\n <\/div>\n\n
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You might also want to consider\u00a0debt crowdfunding<\/strong>\u00a0\u2013 more commonly known as\u00a0peer-to-peer-lending<\/a>\u00a0(P2P).\u00a0Peer-to-peer lending (P2P) is a type of\u00a0business loan\u00a0by a large number of private investors (individuals, businesses or institutions) to your business, usually through an online platform. The idea is that lenders and borrowers get a better rate than they would through banks\u00a0\u2013\u00a0plus decision lead times are significantly shorter. P2P is also known as debt crowdfunding or loan-based lending.

Peer-to-peer lending (P2P) is different to standard\u00a0business loans<\/a>. P2P matches private investors looking to invest their money with people who want to borrow it. In theory, compared to banks, P2P pays higher interest to lenders and charges lower rates for borrowers. The stronger your business profile, the lower the interest rate on your loan.
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Other types of\u00a0equity finance<\/a> –\u00a0Equity finance refers to the capital an external investor injects into your business in return for a share of ownership (equity) and\/or some control of the business. Equity finance investors therefore have a claim on your future earnings but, in contrast to a loan, you don\u2019t pay any interest \u2013 nor do you have to repay capital. If you opt for equity financing, you\u2019ll sell a stake in your business in return for funds. This is in contrast to\u00a0debt financing<\/a>\u00a0(e.g. a loan or a bond) where you take out a loan and pay it back over time with interest.

Angel investors<\/strong>\u00a0(business angels<\/a>).\u00a0Business angels are private individuals who are prepared to put their own money into startup or early-stage businesses in exchange for a share of the company\u2019s equity (i.e. equity finance). Angels may invest on their own or as part of an angel network. Typically they are experienced entrepreneurs and, in addition to money,\u00a0they bring\u00a0their own skills,\u00a0expertise and\u00a0contacts to the table. Business angels plug some of the funding gap that can exist between banks and\u00a0venture capitalists<\/a>, usually investing sums of between R50,000 and R500,000.In contrast to venture capitalists, business angels are more inclined to invest in startups and early-stage businesses. They may also be more flexible in the way they finance a business because they will have a less rigid time frame for exiting a business (i.e. sale or IPO<\/a>).<\/p>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n \n