By James Chittenden
Investors and entrepreneurs today have access to information and funding that was available only to the “big guys” just a generation ago. Crowdfunding, angel, and venture capital investors and entrepreneurs can find each other easily using a variety of methods. EquityNet is one of them. Should you raise crowdfunding or other capital with EquityNet?
What is EquityNet?
EquityNet is a crowdfunding platform that helps for-profit companies raise money from investors. However, investing is limited to accredited investors. The service is headquartered in Salt Lake City, UT and was founded in 2005. They own and maintain several patents for crowdfunding technologies. EquityNet gives entrepreneurs in North America access to thousands of investors and has assisted them in raising more than $500 million in equity, debt, and royalty-based funding. Individuals, entrepreneurs, incubators, and other members of the entrepreneurial community use it to plan, assess, and finance privately held businesses.
What services does EquityNet offer?
EquityNet is a platform that helps businesses and investors find each other. It is not a broker-dealer. Rather, it is a subscription service. They do not facilitate the exchange of funds. EquityNet provides a number of free features to non-paying subscribers as well as additional features to paid subscribers as well. The free plan enables you to set up a profile for investing or business purposes. It also allows you to view summaries of investor profiles. Additionally, it allows you to e-mail your profile to your e-mail list and social media contacts; a service called “crowdcasting”.
The paid subscription offers a more features. In addition to wider exposure, you are able to:
- Generate a business plan
- Use patented business planning tools
- Share and upload documents
- Access detailed investor profiles
- Directly message investors
- Upload a profile to a partner website
- Access forms for fundraising
- View visitors to your profile
The paid subscription including the above features is called the Premium DIY and is available for $299 per month. EquityNet also offers a Full Service option for @2990 per month. It includes all of the above features plus:
- Expert EquityNet consulting
- Refinement of business profile
- Feedback on campaign docs
- Business plan optimization
- Special marketing promotions
- Daily campaign management
It is important to note that raising funds on EquityNet can be free of charge, but the actual transaction does not take place on the site. EquityNet does not allow entrepreneurs to “spam” investors with business plans, pitch decks, or direct messaging. Additionally, the platform is not available for use in the state of Michigan.
What businesses should use EquityNet?
According to the FAQs on the company website, EquityNet is suitable for a range of privately-held companies. Specifically any entrepreneur, business owner, or manager in any stage or type of private businesses (from pre-revenue start-ups to $100M/yr in revenue) can raise crowdfunding capital with EquityNet.
What does it cost to raise crowdfunding capital with EquityNet?
EquityNet offers free plans for both entrepreneurs and investors. EquityNet is not a registered broker-dealer, so there is no commission due on any resulting deal. The only fee for entrepreneurs is the subscription cost.
|EquityNet Pros||EquityNet Cons|
|Quality customer service including telephone||Logistical problems of offline funding|
|Equity crowdfunding||No investor access without paid subscription|
|Commission-free funds. Business receives 100 percent of proceeds|
Keep good books before you raise crowdfunding capital.
Be ready to implement your plans immediately after your funding is approved. To do this, be as precise as possible with the ask. How much will your initiative cost? Be ready to justify your capital raise and to answer questions about expenses, sales, profit margins, and net profits.
Poorly-kept books are a frequent justification for lowering the value of your business or refusing to invest, buy, or lend. Conversely, buyers, lenders, and investors will always pay more for a business with credible financial performance.
Excellent bookkeeping software is available at surprisingly affordable rates.
Tell a credible story before you raise crowdfunding capital.
This is your opportunity to make the case for getting financially involved in your business. Use demographic data to show the total addressable market for your business, and what share of that market you can expect to capture using investor capital. Now…how will you advertise to these people and talk to them at the right time and place?
Explain how you will capture that market using investor capital. Get the “Four P’s” as convincing as possible: price, product, promotion and place.
Explain how the operation of the business will be improved using investor capital. Operational excellence is a powerful marketing advantage. Great processes are the foundation for great systems. Great systems are the foundation for operational excellence, which justifies a premium value for buyers, lenders, and investors.
Wait until you have the best possible marketing and operational strategy before you raise capital. In other words, don’t chase money until you have solved a problem.
While you cannot guarantee returns, you can make the best possible case that an investor will receive a return for investing in your vision.
It may take several rounds of pitching and negotiations before you are able to secure an investment. Game it out with high-quality business planning software and other software such as the One Click Advisor Business Builder.
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Finance, because it is the scoreboard, and keeps everybody paid. Change the “score”, find bookkeeping help, and find capital.
The One Click Advisor Business Builder connects you with all the fundamentals. Skip the hours of research and costly mistakes…we have done the work of locating the best small business services for you.