- June 18, 2020
- Posted by: Kirsten Campbell
- Category: Blog
Well, it seems to have *only* taken a pandemic for equity crowdfunding to be recognized as a viable source of fast funding for small businesses and a practical financial opportunity for the 99% to build wealth (ie. security). Once plagued by a “misinformation campaign” at the hands of state regulators, it seems equity crowdfunding has faced a long trial by fire in the industry, and emerged triumphantly.
Open the gates
The current financial fallout has been swift for many Americans and the instability sweeping Wall Street has impeded money reaching needy pockets. That’s where equity crowdfunding has been able to provide relief – by scaling its existing practical online structure. Plus, with no fraud reported and a substantial cap boost from the SEC, the floodgates of equity crowdfunding are ready to burst.
Prepare for the deluge
Venture capital and Federal aid have been slow to react, as well as effectively distribute money to support small businesses, especially those helmed by diverse entrepreneurs. The equity crowdfunding environment, however, flips the script on finance tropes: men-only founders clock-in at the lowest success rate, with a resounding 41%. In fact, women-only and minority-only founders enjoy respective success rates of 87.5% and 46%. This flies in the face of the venture capital industry, and considering diversity greatly outperforms homogeneity, there’s a prosperous, inclusive future in the flourishing equity crowdfunding ecosystem. Successful crowdfunding raises can create and support up to 54 direct and indirect jobs, on average. That’s the tangible coronavirus financial relief Americans need and crowdfunding has risen to the challenge.
Facts vs fiction
The current ‘pull a lever and see what happens next’ strategy fueled by Federal bailout money has continued to divorce the stock market from everyday financial reality. As Americans are dealing with historic unemployment rates and coronavirus cases climbing as states reopen, the stock market appears to be behaving with a mind of its own. Amidst this volatility, equity crowdfunding has been steadily gaining momentum, pumping nearly $1 billion into local economies, and has received the nod from the SEC to temporarily increase funding caps to $250K from $107K. This move puts more money at the fingertips of diverse entrepreneurs and small businesses to help stem coronavirus financial fallout. Connecting underfunded entrepreneurs with tangible money sources bodes well for an explosive future for small businesses, economic recovery and bolstering diverse communities.