The Potential Benefits of Raising Capital Online
 Dec 01, 2023
It is no secret that startups and small businesses have a hard time getting funding. In fact, according to a report by the National Small Business Association, only half of small businesses in the United states get approved for the financing they need. This is where using an online investment platform like Capital Engine comes in.

Capital raising is a way for startups and small businesses to raise money by selling equity, or ownership, in their company to investors. The biggest benefit of using online capital raising is that it allows businesses to raise money from a large number of people, which can be difficult to do with traditional financing methods.

Another benefit of using a platform is that it can help businesses get exposure to a larger group of potential investors. This is because investment platforms, such as Capital Engine, provide a compliant and efficient way for issuers to post their funding campaign online where it can be seen by millions of people.

Using an online investment platform is a great way to use social media to build buzz and excitement around your business and opportunity to go viral. This is because when people invest in a company through a platform, they are not only giving the startup money, but they are also becoming a part of the company's narrative.

If you are a small business owner who is looking for alternative financing options, raising capital online may be the right choice for you. 

How online investment platforms can benefit startups and small businesses?
The rise of online investment platforms has been a game-changer for startups and small businesses. No longer do these companies have to rely on traditional sources of funding, such as banks or venture capitalists. Instead, they can now turn to their community to raise the money they need to get off the ground.

There are many benefits to online investment platforms, which is why it has become such a popular option for startups and small businesses. Perhaps the most obvious benefit is that it provides access to capital that would otherwise be out of reach. But there are other advantages, too.

For example, online investment platforms can help to build excitement around a company. When people invest in a company, they are more likely to talk about it and spread the word. This can lead to increased awareness and interest, which can be a major boost for a startup or small business.

Another benefit of online investment platforms is that it allows companies to retain more control. With traditional forms of funding, startups often have to give up a significant amount of equity in exchange for the money they need. But with online investment platforms, they can give up a smaller portion of their company while still retaining a majority stake.

Of course, there are some risks associated with online investment platforms, but these are generally outweighed by the potential rewards. And as the industry continues to grow and mature, these risks are likely to decrease.

If you're a startup or small business owner, online investment platforms should definitely be on your radar. It's an incredibly powerful tool that can help you raise the money you need to get your business off the ground.

The benefits of online investment platforms for investors
The JOBS Act, which was enacted in 2012, lifted the ban on general solicitation and advertising for private securities offerings. This change has made it possible for companies to raise capital through online investment platforms. Online investment platforms is a way for startups and early-stage companies to raise capital from a large number of investors.

Online investment platforms is a great way for investors to get in on the ground floor of a company with high growth potential. With online investment platforms, you can invest as little as $500 in a company. And because you're investing in equity, you could see a high return on your investment if the company is successful.

Another benefit of online investment platforms is that you can diversify your portfolio. By investing in a number of different companies, you can reduce your risk. And because you're investing early in a company's development, you can get in on the ground floor of some truly great companies.

If you're interested in online investment platforms, there are a few things you should keep in mind. First, online investment platforms is risky. You could lose all of your investment. Second, it's important to do your due diligence before investing. Make sure you understand the company and the risks involved. Third, be aware that there may be restrictions on how much you can invest and when you can sell your shares.

Despite the risks, online investment platforms can be a great way to invest in some really great companies. If you're willing to take on the risk, it could be well worth it.

The risks associated with online investment platforms
It is important to be aware of the risks associated with online investment platforms before making any investment:
  1. Lack of liquidity: Once you invest in a company through online investment platforms, you may not be able to sell your shares for a significant period of time, or at all. This lack of liquidity can make it difficult to get your money back out of the investment if you need to, or to take advantage of market opportunities.
  2. Dilution: When a company raises money through online investment platforms, existing shareholders may see their ownership stake diluted. This can happen if the company issues new shares to raise funds, or if it sells existing shares that have been previously authorized but not yet sold.
  3. Risk of loss: As with any investment, there is always a risk that you could lose some or all of your investment in a company that fails. This is especially true for early-stage companies, which tend to be more risky than established businesses.
  4. Lack of transparency: Online investment platforms may not provide investors with all the information they need to make an informed investment decision. For example, you may not be able to see the company's financial statements or speak with management directly before investing.
  5. Regulatory risk: The rules and regulations governing online investment platforms are still evolving, both in the United States and internationally. This means there is a risk that the regulatory environment could change in a way that is unfavorable to investors or that makes it more difficult for companies to raise money through online investment platforms.
Despite these risks, online investment platforms can be a great way to support innovative companies and potentially make a profit on your investment. Just be sure to do your homework and understand the risks before putting any money into an online investment platform campaign.

How to find the right online investment platforms campaign to invest in?
If you're looking to invest in an online investment platform campaign, there are a few things you should keep in mind. First, you'll want to make sure the campaign is running on a reputable crowdfunding platform. There are a number of platforms out there, so do your research to find one that suits your needs.

Once you've found a platform you're comfortable with, take a look at the campaign itself.
  • What is the company trying to raise money for?
  • What stage is the company at?
  • How much money are they looking to raise?
All of these factors will play a role in your decision of whether or not to invest.

Next, take a look at the team behind the campaign. What is their experience? Do they have a track record of success? Do they have a clear plan for how they're going to use the funds they're raising? These are all important factors to consider.

Finally, don't forget to do your own due diligence. This means researching the company and the team behind it, as well as the crowdfunding platform itself. Make sure you understand all the risks involved before you invest any money.

If you keep these things in mind, you should be able to find the right online investment platform campaign to invest in. 

About Capital Engine®
Capital Engine® provides forward-thinking organizations with efficient and scalable private capital and investor management solutions, for both traditional and digital assets.

Built for high-performance capital raising, our technology helps leverage the opportunity to better originate and showcase a diverse selection of private investment deals and offer these to investors i.e. a deal’s potential viability can be better assessed, market appetite determined and transaction promptly closed.

Our clients include broker dealers, family offices, wealth managers, incubators, accelerators, social impact and real estate funds, in providing customized SaaS solutions to power private capital and alternative investment platforms, with a strong focus on investor management services. 

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