How Equity Crowdfunding Works with Listed Companies

How Equity Crowdfunding Works with Listed Companies

The discussion over equity crowdfunding laws and its marketplace commonly focuses on its benefits to startup companies and emerging businesses. The access to capital and removal of traditional investment barriers for this sector has been well-documented and trumpeted by Equitise. Less understood, but still equally exciting, is the potential of equity crowdfunding for listed companies. As the alternative finance sector seeks to democratise finance in new and varied ways, listed companies should harness its new capacities.

The quick evolution of equity crowdfunding has supplanted traditional investment sources for startups, providing real competition or VCs and angels. 2014 saw the first instance of a public company raising via equity crowdfunding. Instead of contacting a financial institution or looking to traditional means, English winemaker Chapel Down raised £1.6 million via Seedrs. This marks the next stage of crowdfunding’s evolution.

Aside from the obvious advantage to retail investors who hitherto didn’t have access to this brand of deal, there are many benefits to companies like ‘Chapel Down’. First and foremost, traditional methods of investment take time. The number of meetings required, connections to set up, and funding to acquire demands resources. The online nature of equity crowdfunding avoids this burdensome routine, and is also a cheap manner of amassing multiple investors at the same time. 

The implications of this newfound shareholder diversity is twofold. Firstly, certain stock markets necessitate a minimum number of stockholders – a crowdfunded company will be more easily able to meet this requirement. Secondly, you have a range of investors and a diversified amount. This offers an easy marketing pool for the company who can attest to the democratic and widespread appeal of their product simply by addressing the number of investors they have. Likewise, if there are follow-on offerings, as is common for companies who have used equity crowdfunding, there is an established base of potential investors, and the same VC or angel process doesn’t need to be done all over. 

Brand awareness can be achieved in the same breath as funding, the same cannot be said for traditional modes of investment. Following the footsteps of trailblazing startups, listed companies now want to sample the ease and online maelstrom of action.  Filling the funding gap for companies of all sorts has always been at the core of equity crowdfunding’s concept and appeal, and now they have alternative means to fill these gaps while distributing their offers.

Equitise’s current offers are testament to this, and we are committed to expanding the scope of innovation and competition within the alternative finance community. If you have any questions about our current deals, don’t hesitate to get in touch.

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