The process of launching a company off the ground is hard, there is no way around facing early challenges such as finding adequate resources and funding. With one startup launching every 7 seconds in the United States alone, obtaining the necessary funding to get a company off the ground is even more difficult. In our era of investing, crowdfunding has taken the stage as an enticing opportunity for both investors and startups. There are currently two main ways that startups crowdfund: equity and rewards. Rewards based crowdfunding has heavily saturated the market through commonly known websites such as Kickstarter and Indiegogo. While those sites do work and are often successful, equity based crowdfunding is the way of the future. The following will dive into the advantages of both investment sources and provide helpful insights when planning to invest or launch a startup in the future.

When it comes to launching a business, amassing capital through a rewards based campaign can have the following advantages:

• Gain a following while gathering capital for the idea
• People have to simply believe in your idea, be interested in the product being offered, and believe that it will be successful enough for donors to receive a “reward” that the campaign has promised.
• Rewards based donors do not typically dig too deep into the company’s business plan or care how the company spends money once received, unlike traditional venture capitalist investors.

One common skepticism of equity crowdfunding is that shares of the company you have worked hard to create are being handed out to the public. It is important to remember that on equity crowdfunding platforms like StartEngine, founders set their own terms. Each company can decide what percent of their company they are willing to give away. In addition, consider the various opportunities that come along with this mode of gaining capital in return for equity from the general public:

• Ability to grow a long term loyal following for the company’s brand. There will be a team of people who want the company to succeed just as much as their founders do.
• Investors will likely become built-in brand ambassadors for the product as devotion to brands increases when individuals have a stake in the company. This could then leave the company with lower internal marketing costs as investors will become those who naturally market the product themselves.
• With the opportunity to make long-term returns on one’s investment, as opposed to a one-time reward, investors may be willing to put down more money at the initial launch of an equity crowdfunding campaign.conclusion

Ultimately, the decision to conduct a rewards or equity crowdfunding campaign is up to the founder. With the passing of Regulation A+ and most recently, Regulation Crowdfunding, equity crowdfunding is on the rise. If we know anything about millennials, it is that they value the sense of belonging. This sense of belonging comes directly with having a stake in the growth and possible success of a startup.