Note from Editors:
Remember your clients, the persons who used your products or services? They can be your sources of capital – for business expansion, product upgrade and more. Build relationships with them, and you have your potential investors.
by Sally Outlaw
Too many #entrepreneurs these days are overlooking their best source of #investment capital: their own communities of fans and customers. While many business owners leverage their networks for rewards-based #crowdfunding campaigns, they neglect to use these same groups for investment-based growth capital.
Typically, investment in privately held companies is associated with venture capitalists and accredited investors. But, increasingly, options are available for business owners to also sell their own company shares to the masses.
Specifically, there have been recent, dramatic changes in capital-raising regulations and new software tools that streamline the fundraising process. These tools make it easier than ever for owners to tap into their communities of followers and affinity groups and invite them to be shareholders.
Among the new equity-funding options, the most widely used is Regulation D 506c. This is an update to existing rules that for the first time in decades allows entrepreneurs to promote the fact that they are seeking investment. While this #financing route is restricted to accredited investors only, it does permit those raising capital to advertise their offerings, and therefore, reach those customers and fans who financially qualify. (There are roughly seven million such accredited investors in the United States.)
A capital campaign can be run either on a company’s own website, using software tools such as the CommunityLeader solution for a one-off investment campaign, or through an equity marketplace, such as AngelList, Crowdfunder or any number of other online portals.
The intrastate exemption is an investment offering sold to the general public, and exempt from most federal registration and compliance requirements.
If a business’ customers are mostly local, it can take advantage of an intrastate crowdfunding exemption as the best way to harness capital from that crowd. The intrastate exemption is an investment offering sold to the general public, and exempt from most federal registration and compliance requirements. As of a few months ago, 19 states had enacted intrastate crowdfunding regulations, and 21 had proposed them.
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Curated from Turn Your Customers Into Investors
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