Funding your startup: Crowdfunding vs. angel investment vs. VC

Raising capital for a startup has traditionally been one of the most difficult parts of getting your idea off the ground, but new technologies and platforms have given entrepreneurs a plethora of new ways to make that happen. Nowadays, there are more options than ever to get a new company funded.

"One of the really cool things that's happening right now is this massive proliferation of ways to start a company and ways to get your company funded," said Aaron Harris, a partner at Y Combinator.

New enterprises were once only birthed by born-wealthy proprietors, or business leaders who could roll capital over from another successful venture. As the venture capital industry began to grow, capital became available to innovators who wouldn't have had access to it before. Then, as angel investors grew in popularity, founders had a new way to get capital at an early stage where some VCs wouldn't tread. Now, consumer crowdfunding has added another layer to the investment equation for entrepreneurs.

As funding becomes more and more democratized, we are seeing what Harris calls, "the progressive elimination of gatekeepers." But, the process can still be difficult to navigate, especially if you are a first-time founder.

"Entrepreneurs, whatever they're doing and whatever company they're trying to start, they're so different," said Bobby Franklin, NVCA President and CEO. "Clearly, some of the funding routes that one might go would be better suited for one type of entrepreneur, or one type of idea, than another."

As Franklin noted, certain funding options will work best for specific types of companies. Here are the three most popular forms of funding and how to better understand them.

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When three is a company -- SEBI consultation paper on equity-based crowdfunding in India.

As SEBI tries to regulate equity crowdfunding, the Internet promises to play disrupter.

Roughly a year ago, the Securities and Exchange Board of India (SEBI) issued a consultation paper setting out its proposal to regulate equity-based crowdfunding in India. Comments were solicited from the public. Earlier this week, SEBI announced that it was working on the norms and that a decision may be taken soon.

A quick review of the SEBI paper gives us pointers to what the possible regulations could be. Under the proposed terms, three entities, namely, the crowdfunding platform, the investor, and the issuing company, would be regulated. The issuing company is restricted in terms of its size, the amount of funds to be raised and its age. The investor is restricted in terms of its accreditation, minimum net worth and, in case of eligible retail investors, the maximum investment that may be made overall or in a single crowdfunding event. Crowdfunding platforms are also restricted in terms of who may set them up and the checks and balances to be put in place.

Read the op-ed article in TH dt. 7th Jul 2015

What Is Crowdfunding And How Does It Benefit The Economy

With the passing of President Obama’s JOBS Act this past April, the word of the day seems to be crowdfunding. While this concept has arguably been around for centuries, it is still formally recognized as a new industry to many consumers, particularly those outside the United States.

Crowdfunding is by definition, “the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.” Check out this video to get a clearer idea of the step by step process of crowdfunding.

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