What is Equity Crowdfunding? How Successful Female-led Businesses have secured funding

In recent years, the landscape of investment and entrepreneurship has undergone a significant transformation. Traditional avenues of funding, such as bank loans and venture capital, have been supplemented by the rise of innovative crowdfunding platforms. Among them, equity crowdfunding has emerged as an increasingly popular option for entrepreneurs and investors alike. In this article, we will explore what equity crowdfunding is, how it works, and its impact on the startup ecosystem.

What is Equity Crowdfunding?

Equity crowdfunding refers to the process of raising funds for a business venture by offering shares or equity stakes in the company to a large number of investors through an online platform. Unlike traditional crowdfunding, where contributors receive non-financial rewards or products, equity crowdfunding allows individuals to become actual shareholders in the business. By pooling together small investments from a diverse range of investors, entrepreneurs can secure the necessary capital to bring their ideas to life.

How Does Equity Crowdfunding Work? Equity crowdfunding typically takes place on specialized online platforms that connect entrepreneurs with potential investors. These platforms serve as intermediaries, facilitating the investment process and ensuring compliance with relevant regulations. Entrepreneurs create profiles for their businesses, detailing their vision, objectives, and financial projections. Interested investors can then browse through these profiles and decide which ventures to support.

Investors who choose to participate in an equity crowdfunding campaign typically contribute smaller amounts of money compared to traditional venture capital investments. Instead of relying on a single large investor, entrepreneurs can attract numerous small-scale investors who believe in their idea or product. In return for their investment, these individuals receive equity in the company, usually in the form of shares.

Benefits of Equity Crowdfunding

1. Access to Capital: Equity crowdfunding provides entrepreneurs with an alternative funding source, enabling them to bypass traditional financial institutions and tap into a larger pool of potential investors.

2. Market Validation: By presenting their business ideas to the public, entrepreneurs can gauge market interest and validate their products or services before they launch.

3. Investor Engagement: Equity crowdfunding creates a community of investors who not only provide capital but also become advocates and supporters of the business, helping it grow.

4. Marketing and Brand Exposure: Crowdfunding campaigns generate media attention and help raise awareness about the venture, potentially attracting future customers and partners.

5. Diverse Investment Opportunities: Equity crowdfunding allows individuals from various backgrounds to invest in early-stage businesses and participate in the potential financial gains of successful ventures.

Regulations and Limitations: Equity crowdfunding is subject to regulations and restrictions imposed by financial authorities in different countries. These regulations aim to protect both investors and entrepreneurs from potential risks associated with crowdfunding campaigns. Entrepreneurs must comply with specific requirements, such as disclosing relevant financial information and adhering to investor protection measures. Investors, on the other hand, may face limitations on the amount they can invest or restrictions on reselling their equity shares.

Equity crowdfunding has transformed the entrepreneurial landscape, empowering innovators to access the necessary capital to bring their ideas to fruition. By democratizing the investment process, this funding model has enabled individuals from all walks of life to support and benefit from early-stage ventures. As the popularity of equity crowdfunding continues to grow, it is important for entrepreneurs and investors alike to understand its intricacies, regulations, and potential impact on the startup ecosystem.

8 successful female led businesses who have used equity crowdfunding platforms to raise capital

1. Glow Recipe: Glow Recipe is a skincare brand co-founded by Sarah Lee and Christine Chang. They launched a successful equity crowdfunding campaign on a popular platform and raised over $100,000 in just a few days. The company has since grown exponentially and is known for its innovative K-beauty products.

2. Purlisse Beauty: Purlisse Beauty, founded by Jennifer Yen, is a skincare and cosmetics brand that focuses on creating products inspired by Asian beauty rituals. Through an equity crowdfunding campaign, they raised over $1.2 million, allowing them to expand their product line and reach a wider customer base.

3. Plum Alley: Plum Alley is an investment platform that focuses on supporting and promoting women entrepreneurs. They have facilitated numerous successful equity crowdfunding campaigns for female-led businesses across various industries. Some notable campaigns include the innovative period product company, THINX, and the female-centric co-working space, The Wing.

4. Moons and Junes: Moons and Junes is a Danish lingerie brand founded by Agnete Friis. They launched an equity crowdfunding campaign to fund their expansion and successfully raised over $400,000. Their inclusive approach to lingerie design has resonated with customers, and the brand continues to grow and thrive.

5. Bird + Stone: Bird + Stone is a jewelry brand with a mission to empower women and support social causes. Elana Reinholtz, the founder, raised over $30,000 through an equity crowdfunding campaign, allowing the company to scale their production and expand their impact.

6. Shebah: Shebah is an Australian ridesharing service designed exclusively for women and children. Founder and CEO George McEncroe successfully raised over AUD 3 million through an equity crowdfunding campaign in 2018. This funding allowed Shebah to expand its operations and reach more customers across Australia.

7. Inland Railways: Inland Railways, led by CEO Natasha Peacock, aims to build and operate an innovative freight rail network in Australia. They launched an equity crowdfunding campaign in 2016 and raised over AUD 1.3 million. This funding contributed to the development and planning of their railway infrastructure project.

8. mPort: mPort is an Australian health technology company founded by Dipra Ray. They developed a 3D body scanning system that helps individuals track their fitness progress and measurements accurately. In 2015, mPort raised over AUD 1.6 million through an equity crowdfunding campaign, enabling them to expand their network of scanning pods across the country.

Ready to start your own crowd equity campaign? Start here.

• Australia: Equitise, Birchal, MiCrowd

• Canada: Seedrs, Fundable, StartEngine

• China: AngelList China, Qianhai Equity Crowdfunding Platform, Zhongguancun Equity Crowdfunding Platform

• France: Anaxago, Wiseed, Seedrs

• Germany: Seedrs, Companisto, Seedmatch

• India: AngelList India, Tracxn, LetsVenture

• Italy: Mamacrowd, Seedrs, CrowdFundMe

• Japan: SBI Sumitomo Mitsui Securities Crowdfunding, Campfire, Readyfor

• Mexico: Invierteme, Kuna, Play Business

• United Kingdom: Seedrs, Crowdcube, SyndicateRoom

• United States: AngelList, SeedInvest, StartEngine