Rewards, Debt (P2P and P2B Lending) and Equity Crowdfunding. Fundraising options for entrepreneurs based on cash flow, funding goal, timing, development stage, etc.

1. >$50,000
<$50,000
REWARDS OR DEBT (P2P, P2B)
EQUITY
DEBT (P2B)
or
EQUITY
$50,000-$500,000
You can raise
significantly
more funds
You will not
have monthly
cash outflow
(as in debt
model)
You will give up a
small % of shares, so
will keep the control
over the company’s
operations and
planning
The most time
consuming out of
three types of
crowdfunding
Significant
upfront costs and
– annual SEC
filing expensesEQUITY
Pros & Cons:
Lending:
REWARDS
Costs – depend on the
amount to be raised.
Portal fees – 7.5%– 10% plus legal and accounting expenses, annual filing costs.
Very time
consuming and it
takes months to
get the funds
In the case of fixed
funding there is a
possibility that you
will not get any
money
Huge competition
for backers’
attention on
popular
crowdfunding
portals
Not all types of
businesses/products
are a good match for
the rewards type
You keep your
company’s
ownership
You can raise
significantly
more than your
initial goal
You can use the
campaign for customer
engagement, marketing
and PR, pre-sales,
beta-testing,
crowdsourcing, finding
potential partners,
distributors and
investors
You don’t need to file
extensive documentation
(as in equity crowdfunding)
or to have high credit score
(as in P2P lending) or a
profitable business (as in
P2B lending)
Costs – 7%-14% plus perk
fulfillment and marketing expenses
YOUR BEST OPTION
Quick
access to
cash
You keep your
company’s
ownership
Costs:
0 (Kiva Zip) up to 15% for P2B and 7% to 35% for P2P
Must have a good
credit score (P2P)
or positive cash
flow (P2B)
Monthly cash
outflow
AMOUNT
debt (P2B) or equity
Yes
debt (P2P) or rewards or equity
No
<1 month
equity
rewards
debt
3-5 months 5-10 months
Month: 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 |
TIME
STAGE
rewards
rewards
debt
(P2P)
debt
(P2B)
equity
(?)
equity
Startup Growth
P2P Lending – for startups in need for immediate cash and means to meet
payment obligations
P2B Lending – for established businesses with positive cash flow to finance their
expansion
REWARDS – for businesses operating in B2C market with reasonably inexpensive
and innovative but not too complicated products. Must have social appeal; be able
to produce the product within several months after the end of a campaign
EQUITY – for businesses that can’t (don’t want to) borrow money through P2B
marketplace, companies in need to raise higher amounts of money. Must have cash
upfront to fund the legal and accounting expenses and can wait for 5 to 10 month to
receive the funds.
Crowdfunding
Fund Your Business
What Type of
Crowdfunding to Use to
Fund Your Business
www.CrowdfundProductions.com