Have you ever thought about being a partner in a company without investing a lot of money or time? Well, this situation is totally possible these days, where growing companies/startups can turn to the public in search of capital.

In this sense, Equity Crowdfunding for companies is a smart outlet for businesses that need one-off amounts. With more than 84 million moved in 2020 alone, the modality is becoming increasingly interesting for the market.

Want to know more about this topic? So, read on to understand what Equity Crowdfunding is for companies, how it works and its main benefits for the economy. Good reading!

After all, what is Equity Crowdfunding?

Equity Crowdfunding is a way that companies, or startups, at an early stage have found to raise financial resources. These amounts are collected collectively, where we have individuals investing their money in these high potential businesses.

For the company, it is a great way to raise money without much bureaucracy. Whether to hire qualified professionals, complete a project or invest in innovation, among other possibilities, Equity Crowdfunding for companies is a pleasant surprise for developing companies.

On the other side of the coin, we have investors, who can invest their capital in businesses with a lot of potential and, thus, receive shares – or stocks – of the company. In this way, we can say that investors become direct partners in the company.

How does Equity Crowdfunding work?

How Equity Crowdfunding works for companies or startups is quite simple. The company signals a value to capture — which happens on online platforms, available on the internet — and a group of people can put money into the opportunity.

Before investing, it is possible to check business data, such as balance sheet, billing, business statistics and even the staff. This transparency is important to increase the decision-making capacity of investors.

Beyond that point, there aren’t many restrictions on investing. Any investor can put their money and become a business partner, as long as certain conditions are met, according to the rules established by the CVM, the body responsible for regulating the practice:

• Qualified investors can invest any amount, as long as they have more than 1 million reais in financial investments;

• Investors with more than R$ 100 thousand invested, or with annual gross income, may invest only 10% of this amount per year;

• Investors with less than BRL 100,000 invested, or with annual gross income, can make investments of a maximum of BRL 10,000 per year.

In fact, it is exactly this differential that makes the proposal of crowdfunding for companies so interesting. As the entry rules are minimal, investment quotas can be small and, consequently, the volume of participants can be higher.

In addition, the CVM has been making adjustments to the corporate crowdfunding process to make the modality more dynamic, safe and accessible for those involved.

Profiting from investment

In fact, it is exactly this differential that makes the proposal of crowdfunding for companies so interesting. As the entry rules are minimal, investment quotas can be small and, consequently, the volume of participants can be higher.

In addition, the CVM has been making adjustments to the corporate crowdfunding process to make the modality more dynamic, safe and accessible for those involved.

In this scenario, there are three possibilities:

1. The company/startup is sold to another larger company;

2. The company/startup carries out a public offering of shares (IPO) on the stock exchange;

3. The investor decides to sell his stake in the company and negotiates the exit.

Regardless of the choice, these three ways make it possible for investors to profit from the application made. Thus, the amounts won can be applied in new investment rounds to multiply the money.

Benefits of equity crowdfunding for the economy

In general, investors and companies can benefit a lot from crowdfunding for startups, but the economy also gains a lot from this collective investment practice, which has been popular in recent years.

And this is true of the consequences that Equity Crowdfunding for companies can have. Below, we list its main benefits:

• Job generation: with companies/startups receiving money to expand their business, it is inevitable that new positions will be needed in the market, which helps to generate jobs to strengthen the economy;

• Warming up of the economy: with the warming of the economy, we have more people consuming, directly helping other companies and making the financial wheel spin. This makes producers, distributors and society as a whole stronger and more prepared for the economic future;

• Investment in basic items: with more companies operating, generating employment and growing, we also have more taxes being paid and this can be reversed in education, health, basic sanitation and other benefits for the population;

• Access to innovation: another possibility that crowdfunding for companies creates is access to innovation, where the capital raised in investment can enhance the creation of new products or services;

So, as we can see, Equity Crowdfunding is a complete financing/investment model, which helps investors to increase their capital, but also allows companies to continue with their dreams and, in a direct way, positively affect the country’s economy.

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