Co-founder & COO at @Seedrs, Carlos Silva

Traditionally, raising funds for your early-stage business has revolved around getting a number of people such as friends, family and independent investors to agree on a set of terms, making them sign the legal paperwork that sets those terms and finally collecting the different amounts of funding granted by each of these individuals.

On average, this process takes time. A lot of time. Time that an early-stage entrepreneur has to take away from building and growing his business. In the seed-stage, six months away from the core activities of your business can really slow you down and even sidetrack you from your key milestones.

At Seedrs, we believe that fundraising can be much more efficient than it currently is. The crowdfunding model allows you to create much more value than just the money you’re looking for.

Efficiency

We have found that the average time to fund on Seedrs is around 24 days. Obviously the drafting of a campaign takes time. Crowdfunding is an extremely visual way of raising funds and you definitely need to complement your written pitch with compelling videos, images and graphics. The launch of your campaign also takes time. It’s important to line-up the different outreach efforts that will drive momentum to your campaign. Still, if you take into account 4 to 6 weeks of preparation, raising funds through equity-crowdfunding remains very efficient in terms of time.

Validated Learning

If you’ve got an MVP built and you’re now testing the different hypotheses that will get you to product-market fit, you can leverage the power of collective thinking to assess whether you’re up to something big. Your investors will essentially become your trial market and your first ambassadors.

Community Building

With crowdfunding, you can bring in your existing communities and get them to be part of your journey. Apart from the investors we have registered on Seedrs, your campaign can also be seen by anyone that you connect with through your outreach efforts. Targeting the right communities both online and offline can bring people that are passionate about what you’re building and that want you to win into your round.

Value chain lock-in

Another great advantage of raising funds through equity-crowdfunding is that you can bring all the stakeholders surrounding your business into your round. Imagine having users, customers and partners with a vested interest in your success. The power of having them on board is that you are effectively locking in your value chain. They will vouch for you, help you build your business and most importantly, remain on your side regardless of competition.

Publicity

Finally, given that crowdfunding is by nature a public and transparent way to raise funds, what you’re effectively doing is promoting your startup. If you manage to get some press about your campaign in the publications that target your audience you’ll also generate buzz and word of mouth about your business. In the end, you’re also acquiring new users, new partners and even potential future investors while raising your current round.

All in all, if done correctly, raising funds from the crowds will get you the money that you need while allowing you to stay focused on growing your business. What you’re doing to promote your round is also promoting your business.