Sick of chasing after Angels, VCs and Bankers for funding to grow your business?
You might not have to anymore.
Equity Crowdfunding is giving promising young companies a chance to raise money from the crowd in a whole new way. Ever heard of it? If not, think of it like a Kickstarter campaign, but instead of a physical reward, people get shares of your company.
Sound too good to be true? It’s absolutely real: you can now sell shares of your business to almost anyone, as long as you’re incorporated, your head office is in a participating jurisdiction, you have a business plan, and you’re not doing anything illegal.
You also have to raise your funds on a secure equity crowdfunding portal. Securities regulators set the rules for exactly how you can raise money. In the USA, the JOBS Act allows equity crowdfunding, and in Canada the Startup Crowdfunding Exemption is the one you want to look at. There are a number of other exemptions that allow for equity crowdfunding as well; check with the National Crowdfunding Association, or the National Crowdfunding Association of Canada, to learn more about those.
But before we get to the specific rules, let’s talk a bit more about this exciting new opportunity.
If it seems like everywhere you look, doors are slamming and you just can’t get the money you need to grow your business, equity crowdfunding might be your answer.
How does Equity Crowdfunding Work?
To raise any money with equity crowdfunding, you have to be totally transparent about your company’s performance and finances. This is a marketplace where the crowd gets to know everything about your business so they can make an educated decision to invest in you – or not. So if you don’t have a business plan, now’s the time to write one. If you’ve been slacking on ANY filings or taxes, catch up.
There’s an important legal component too; a securities lawyer can ensure your corporate documents are in order and help you structure your equity crowdfunding offer, including the type and price of shares. There are actually quite a few legal considerations to be made before you launch an equity crowdfunding campaign, so you must connect with a good lawyer. Yes, it costs money and no, it’s not the most exciting part of your campaign, but you absolutely have to do this part. It’s non-negotiable.
Once all the housekeeping’s done, you can choose a platform to showcase your company and your equity offer. Look for a portal that offers a lot of resources to help you mount a successful campaign. Just like Kickstarter, you have to have a great marketing campaign to make sure investors know about your offer, so the more support you can get from the platform, the better.
Also take a look at the due diligence or vetting process that the platform uses. Some portals make companies apply to work with them, while others require just a simple sign-up process. The ones that are really easy to sign up for don’t always have the best companies using their services, and are more vulnerable to fraud and unethical businesses. You might not want to be associated with those businesses, so take a look at the companies that are already raising money on a given platform before you decide to use them. Platforms also charge a fee, which could be a flat rate or a percentage of the money you raise. Fees could range from a few hundred dollars to several thousand.
Know that it will cost you some money to launch an equity crowdfunding campaign (in legal fees, platform fees, and consulting or business plan coaching fees), but it’s so worth it to know that your business is healthy and organized, you have a superb business plan, and you have an excellent crowdfunding platform to help you boost your campaign.
Is My Company a Good Fit for Equity Crowdfunding?
Like rewards-based crowdfunding, equity crowdfunding requires a great marketing plan; you need a good way to get the crowd behind your idea and excited about investing in it.
But a successful campaign is about more than just good marketing. Your company also needs to be fundable, and that’s a bit of a subjective judgment.
Most companies need to be more than just ideas when they get into equity crowdfunding. If you’re not generating revenue, you’re about to. You might have a working prototype, or you’ve done beta testing to prove your concept. Perhaps you have investors or advisors endorsing you already, who will increase the confidence of the crowd.
A successful campaign is about more than just good marketing. Your company also needs to be fundable, and that’s a bit of a subjective judgment.
Here are a few other ways to assess whether your company is fundable:
How Equity Crowdfunding Fills the Financing Gap
If you’re a startup owner then you know how hard it is to find financing for your business, especially if your company is really new. It’s hard to get bank financing as a new company, because you don’t have many assets and startups are considered high-risk to lenders. Most Venture Capitalists won’t take a chance on a really small company and it’s hard to even grab their attention when thousands of new businesses are popping up all over North America every month. Angel funding is so incredibly risky that there just aren’t that many Angel investors out there, and many of them are tapped out already because they get so many pitches.
With equity crowdfunding, you can raise small amounts of money from almost any member of the public, connecting your company to capital that simply wasn’t accessible until now.
And once you do, you have direct access to a group of investors who can become powerful ambassadors for your brand.
I hope you’re as excited about that as I am!
Ready to grow your business? Download your FREE Ultimate Guide to Prepping Your Business for Equity Crowdfunding and get set to skyrocket your business!
This article was first published on StartUp Mindset.
Women of the Middle East have made significant strides in the past decade in a number of sectors, but huge gaps remain within the labor market, especially in leadership roles.
A huge number of institutions have researched and quantified trends of and obstacles to the full utilization of females in the marketplace. Gabriela Ramos, is the Chief-of-Staff to The Organization for Economic Co-operation and Development (OECD), an alliance of thirty-six governments seeking to improve economic growth and world trade. The OECD reports that increasing participation in the women's labor force could easily result in a $12 trillion jump in the global GDP by the year 2025.
To realize the possibilities, attention needs to be directed toward the most significantly underutilized resource: the women of MENA—the Middle East and North African countries. Educating the men of MENA on the importance of women working and holding leadership roles will improve the economies of those nations and lead to both national and global rewards, such as dissolving cultural stereotypes.
The OECD reports that increasing participation in the women's labor force could easily result in a $12 trillion jump in the global GDP by the year 2025.
In order to put this issue in perspective, the MENA region has the second highest unemployment rate in the world. According to the World Bank, more women than men go to universities, but for many in this region the journey ends with a degree. After graduating, women tend to stay at home due to social and cultural pressures. In 2017, the OECD estimated that unemployment among women is costing some $575 billion annually.
Forbes and Arabian Business have each published lists of the 100 most powerful Arab businesswomen, yet most female entrepreneurs in the Middle East run family businesses. When it comes to managerial positions, the MENA region ranks last with only 13 percent women among the total number of CEOs according to the Swiss-based International Labor Organization (ILO.org publication "Women Business Management – Gaining Momentum in the Middle East and Africa.")
The lopsided tendency that keeps women in family business—remaining tethered to the home even if they are prepared and capable of moving "into the world"—is noted in a report prepared by OECD. The survey provides factual support for the intuitive concern of cultural and political imbalance impeding the progression of women into the workplace who are otherwise fully capable. The nations of Algeria, Tunisia, Morocco, Libya, Jordan and Egypt all prohibit gender discrimination and legislate equal pay for men and women, but the progressive-sounding checklist of their rights fails to impact on "hiring, wages or women's labor force participation." In fact, the report continues, "Women in the six countries receive inferior wages for equal work… and in the private sector women rarely hold management positions or sit on the boards of companies."
This is more than a feminist mantra; MENA's males must learn that they, too, will benefit from accelerating the entry of women into the workforce on all levels. Some projections of value lost because women are unable to work; or conversely the amount of potential revenue are significant.
Elissa Freiha, founder of Womena, the leading empowerment platform in the Middle East, emphasizes the financial benefit of having women in high positions when communicating with men's groups. From a business perspective it has been proven through the market Index provider MSCI.com that companies with more women on their boards deliver 36% better equity than those lacking board diversity.
She challenges companies with the knowledge that, "From a business level, you can have a potential of 63% by incorporating the female perspective on the executive team and the boards of companies."
Freiha agrees that educating MENA's men will turn the tide. "It is difficult to argue culturally that a woman can disconnect herself from the household and community." Her own father, a United Arab Emirates native of Lebanese descent, preferred she get a job in the government, but after one month she quit and went on to create Womena. The fact that this win-lose situation was supported by an open-minded father, further propelled Freiha to start her own business.
"From a business level, you can have a potential of 63% by incorporating the female perspective on the executive team and the boards of companies." - Elissa Frei
While not all men share the open-mindedness of Freiha's dad, a striking number of MENA's women have convincingly demonstrated that the talent pool is skilled, capable and all-around impressive. One such woman is the prominent Sheikha Lubna bint Khalid bin Sultan Al-Qasimi, who is currently serving as a cabinet minister in the United Arab Emirates and previously headed a successful IT strategy company.
Al-Qasimi exemplifies the potential for MENA women in leadership, but how can one example become a cultural norm? Marcello Bonatto, who runs Re: Coded, a program that teaches young people in Turkey, Iraq and Yemen to become technology leaders, believes that multigenerational education is the key. He believes in the importance of educating the parent along with their offspring, "particularly when it comes to women." Bonatto notes the number of conflict-affected youth who have succeeded through his program—a boot camp training in technology.
The United Nations Women alongside Promundo—a Brazil-based NGO that promotes gender-equality and non-violence—sponsored a study titled, "International Men and Gender Equality Survey of the Middle East and North Africa in 2017."
This study surveyed ten thousand men and women between the ages of 18 and 59 across both rural and urban areas in Egypt, Lebanon, Morocco and the Palestinian Authority. It reports that, "Men expected to control their wives' personal freedoms from what they wear to when the couple has sex." Additionally, a mere one-tenth to one-third of men reported having recently carried out a more conventionally "female task" in their home.
Although the MENA region is steeped in historical tribal culture, the current conflict of gender roles is at a crucial turning point. Masculine power structures still play a huge role in these countries, and despite this obstacle, women are on the rise. But without the support of their nations' men this will continue to be an uphill battle. And if change won't come from the culture, maybe it can come from money. By educating MENA's men about these issues, the estimated $27 trillion that women could bring to their economies might not be a dream. Women have been empowering themselves for years, but it's time for MENA's men to empower its women.