Equity Crowdfunding (not) for indie hackers?
Has anyone researched equity crowdfunding platforms or has experience raising funds through one? Can you share any experience and considerations - pros/cons and how you chose a platform - applied to more than one?
The leading platforms appear to be: StartEngine, WeFunder, SeedInvest, Republic, with many more operating as per https://venturebeat.com/2018/06/09/todays-best-crowdfunding-platforms-by-the-numbers/
I am looking at some campaigns and they don't make sense - like non-profitable businesses get $5-7m valuations based on <$10k MRR. It seems like if you could raise via crowdfunding you give up a lot less equity (and no control) compared to traditional angel/VC-funding route.
UPDATE:
I read some articles and interviews and here are my takeaways:
- Crowdfunding works best for businesses with strong user communities
- The fees for fundraising via crowdfunding platforms are too high
- Not all businesses may want to make all their (esp. financial) info public, which is necessary to be listed on a crowdfunding platform. This would be especially true for highly competitive industries and spaces.
I do not get the purpose of equity crowdfunding at all. As you said the valuations are extremely high and the quality of the projects is poor (even for the so-called "vetted" equity crowdfunding marketplaces). I have the impression that most of the companies use these websites as a last resort.
Maybe that will change in a few years though.
On the other hand I think crowdfunding such as Kickstarter/IndieGogo is a great way to raise awareness and build a base of early adopters / fans.
I 100% agree that Kickstarter and IndieGogo are great platforms for funding product development and increasing awareness.
It's hard to say if the evaluations make sense based on MRR and profit only. There are several examples of companies that raised tens of millions without a business model and others without even a product.
It's true that you can keep more equity but you are also taking money from people that in most of the cases don't have a lot and don't knoe what they are doing. I suppose that puts a lot of additional pressure on you.
The founder of hackernoon recently raised 1 million with crowdfunding and wrote an article about his experience and the process. You can find it on producthunt.
I read some articles and interviews and here are my takeaways: