Advantages of crowdinvesting for startups and investors

The traditional sources of funding business projects are co-founders' money, attracting bank loans and private investor capital. Crowdinvesting is an alternative method of fundraising that has not yet become widespread, but it provides unique opportunities for both investors and entrepreneurs.

In this post, we will tell you about the advantages of crowdinvesting platforms for all the process participants. The abstracts are taken from a review by Puzzle Capital.

The advantages of crowdinvesting for startups:

1. A powerful marketing tool. Placement on well-known crowdinvesting platforms increases the awareness of the target audience of the company's product and the level of trust from private investors, which is reflected in the investment inflow.
2. Low cost of raising capital. Crowdinvesting platforms offer flexible conditions for entrepreneurs to attract private investments.
3. Raising large amounts quickly. The necessary amount for funding a company can be collected much faster and in a larger amount than by means of the traditional way.
4. Selecting the transaction format. Startups can choose the transaction format: selling a company's stake or receiving funds in the form of a debt.
5. Testing a business model. Additional project scoring and feedback from the public will help refine the business model and strengthen the unique selling proposition (USP).

The advantages of crowdinvesting for investors:

1. Low entry threshold. You do not need to sell your apartment or car in order to invest in a promising project: a minimum amount of savings is enough.
2. High returns. If a business idea is successfully implemented, the potential return on the transaction will be very high, reaching hundreds or even thousands of percent.
3. Saving your time. Crowdinvesting platforms carefully check the documentation of startups and their compliance with the requirements, saving time for investors and reducing risks.
4. High level of diversification. With the help of crowdinvesting, investors can expand their portfolio with shares of companies from different areas.
5. Flexible transaction formats. Investors can choose a platform to make a loan transaction or purchase a company's stake.
6. Tax benefits. State sponsored schemes around the world offer tax refunds and other benefits.
7. Modern technologies. High level of technology and information content when making transactions

What would you add to these points based on your experience?