Why Raise Capital

Why Raise Capital.

Venture capital which is the traditional way of funding is crucial to a start-up's success, but it is not immediately available to most start-ups. Nor is Venture capital available in smaller amounts that might be appropriate for very young companies. Most venture capitalist fund start-up that have survived their earliest stages and are expanding. Therefore,the financing cycle is left with a funding gap between the seed and early stage.

Regulation Crowdfunding is a bridge type of funding that provides start-up's the opportunity to raise significant capital (maximum of $5million) to grow and survive their earlier stages

When companies raise capital as a Community Backed Venture, they:

Extend Runway

Runway indicates how long a company has before running out of cash and running into serious liquidity problem. When a start-up is able to raise capital as expected, it mitigates the risk of running out of cash, therefore extending the runway.

Reduce your cash burn rate

Cash burn rate is the difference between cash spent (monthly average) and cash received (monthly average). Raising capital can increase the cash position of the issuer, as such will reduce the cash burn rate of the issuer.

Mitigate the Risk of entangling in the valley of death

The Valley of Death is a financing stage where companies need significant capital but lack revenue. Previously, this gap was $25k to $250k, but Reg CF now allows raises up to $5 million, boosting follow-on funding opportunities. Studies show that startups can exit this stage by raising $5 to $20 million for growth.

Your investors could potentially turn into your customers

Shareholders have the tendency to be loyal to your brand and might want to patronise your product and service.

The Network Effect

You can leverage the PTCG to connect with investors globally who might be interested in participating in offering. That way you can build an enormous network who can give feedback on your product.

Your customer could potentially turn to your investors

Raising capital from the crowd is a powerful community-building tool that can continue to drive value into your business. When your customers and/or potential customers,followers and fans have a slice of the cake in your company, you turn them into brand ambassadors who can spend more on your product, engage more with your brand and refer new customers.