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What is better for startupper to choose: equity crowdfunding or reward-based crowdfunding?

Helen LarsenHelen Larsen subscriber Posts: 58 Bronze Level Member
in Business Planning
Hi! I want to launch a crowdfunding campaign.  And I hesitate choosing between equity and reward-based crowdfunding.  As an investor I prefer equity crowdfunding, because I partly become an owner of new company and it gives me more opportunities and chances to make a profit in the future. But as the business owner, what would be better for me?
Thanks in advance for sharing your opinion ;)
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    Gregory101Gregory101 subscriber Posts: 51 Bronze Level Member

    It depends on what kind of project you have.

    For example, if you’re a start-up that produces VR glasses, reward crowdfunding may work better for your company since the majority are more interested in trying the product instead of owning some shares in your company; on the other hand, if you are a company that provides food delivery service, equity crowdfunding may work better for you since if you have a good business plan, private investors and venture capital firms may be willing to give you money to expand your business.

    Reward crowdfunding is like to pre-order a product; equity crowdfunding is like to invite shareholders to invest in your business.

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    CurtisMLeeCurtisMLee subscriber Posts: 34 Bronze Level Member
    For startups that are working to gain more traction and exposure, this form of equity-based crowdfunding platforms will provide greater benefits than those that offer rewards
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    McCandlessMcCandless subscriber Posts: 52 Bronze Level Member

    Equity crowdfunding is an exciting new way to gain future equity in revolutionary startups with investment minimums starting as low as $100.

    Instead of just getting a free gift for reward based crowdfunds like Kickstarter.

    Investing in an equity Crowdfunding campaign allows you to receive equity shares in the company and if the are successful it can mean good things for your return. ReWalk, an early robotics company raised capital using Equity Crowdfunding. 14 months later early backers made a 500% return.

    So for many it makes more sense to invest in Equity Crowdfunding campaigns instead of reward based because you have a chance of reaping financial rewards as the company experiences success.

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    saravanansaravanan subscriber Posts: 389 Silver Level Member
    Crowdfunding is the act of raising capital through the crowd through the (pre-)sale of a product, donations, or perks, and equity crowdfunding is the act of raising capital through the crowd through the sale of securities.
    In equity-crowdfunding, investors give larger amounts of money (at least $1,000 and often a lot more). When investors give the money, they don’t get a reward, but instead, a small piece of equity in the company itself.
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