Categories: NewsTechnology

Security Offerings Become The New Crowdfunding For Startups

Raising funds is one of the top priorities for nearly every startup in existence, regardless of whether they have a working product or not. Crowdfunding portals can soon be used by startups to sell shares to investors, rather than using the traditional reward option such as on Kickstarter and Indiegogo.

Startups Have An Easier Time To Raise Capital

As of next Monday, small businesses and startups will be able to wield the power of crowdfunding platforms to raise up to US$1m in funding. Rather than offering physical or digital merchandise in return, these companies can now attract mainstream investors over a twelve-month period.

However, there is no guarantee this move will attract a lot of investors in the first few months.A new process is always facing mental hurdles before being embraced in full, especially considering this new option is rather complex and involves higher costs. Moreover, investors and startups will need to work with disclosure requirements, which may put off a  lot of people.

As one would come to expect, the government is keeping a close eye on this new situation, as the fundraising can only take place through registered broker-dealers and regulator-approved funding portals. Five portal applications have been approved, and four have been withdrawn already. In the end, it will be impossible to say whether or not this can become a success.

Securities offerings are treacherous waters for existing crowdfunding platforms, and Kickstarter is the first one to say they will not expand into this new line of offerings. However, there are certain appeals to this concept, as anyone can become an investor, which also helps to build company-consumer relationships at an early stage.

Related Post

One thing that will make this solution succeed or fail are the fees associated with these securities offerings. Fees can vary anywhere from 5% to 10% whereas some platforms may also take equity in the company itself when listing their campaign. This will not be a cheap solution for either investor or issues; that much is certain.

Source: WSJ

Images credit 1,2

Apple users can now download the app of The Merkle in the App Store!

If you liked this article follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin and altcoin price analysis and the latest cryptocurrency news.

JP Buntinx

JP Buntinx is a FinTech and Bitcoin enthusiast living in Belgium. His passion for finance and technology made him one of the world's leading freelance Bitcoin writers, and he aims to achieve the same level of respect in the FinTech sector.

Share
Published by
JP Buntinx

Recent Posts

TRX Price Prediction: Tron Network Fee Cut to Spark New ATH?

Back into Spotlight: Tron Network Fee Cut Could Push TRX to ATH, But This DeFi…

8 hours ago

Altcoin Alert: Crypto Market Cap Breaches Key Level Hinting at an 8000x Rally for this Shiba Inu Killer

Shiba Inu (SHIB) gave enormous returns in 2021, making many early holders millionaires. After the…

12 hours ago

XRP Crash? XRP Falls Below $0.5 Resistance Level as Next Gen Altcoin JetBolt Takes Over

Spooky season might be over but doom is still looming as Ripple’s XRP falls below…

15 hours ago

This New Exchange Token Is Poised for a Price Surge Alongside Cardano and Avalanche – Analysts Predict Huge Gains This November

Three promising altcoins are causing a stir among investors this November: Avalanche (AVAX), Cardano (ADA),…

15 hours ago

With Dogecoin Dipping and TRON Holding, Is Lunex the Hottest Crypto Now?  

Everyone knows what the hottest crypto can do. When it was so hot it was…

15 hours ago

Tron Fees To Be Cut In Half Through Proposal 95, Cutoshi Surpasses $600k As TRX Investors Join CUTO Presale

The Tron network has witnessed incredible growth in several areas, especially in its adoption, which…

16 hours ago