Equity crowdfunding, or raising Funds from accredited and non-accredited investors can be a great alternative to venture capital for startups. This strategy has become significantly more popular in recent years as venture capital has become harder to come by, and changes in regulations allow companies to raise more money at one time.
But despite crowdfunding Growing in fame It offers a whole host of benefits to startups that choose it, and many venture capitalists continue to speak negatively about the strategy. Many traditional investors feel that equity crowdfunding is only for startups that cannot raise venture capital. Rather, they consider the capital raised in this way to be just cash that lacks the value that the investor brings, whether it is their network that can help with recruitment and connecting with clients, or their own mentorship and expertise.
However, startups that have been on the crowdfunding route say VCs are just talking by their own book.
Chris Lostrino, founder and CEO of crowdfunding data platform KingsCrowd, believes that crowdfunding is definitely not limited to raising capital. KingsCrowd has been able to attract recurring investors, customers and even talent from their crowdfunding campaigns, he told TechCrunch+, adding that he has seen many other startups doing the same.
“I would argue that the value added by venture capital is nothing like the reality,” Lustrino said. “They want to keep their monopoly.”