The startup community continues to thrive amidst the challenging economic climate; this is a testament to the resilience of the human spirit and its ability to thrive in the unlikeliest of circumstances.
Equity crowdfunding is one of the ways to give these startups a shot at success. Inspired by its own crowdfunding campaign on Wefunder, Talino Venture Labs invited industry insiders for its #TalinoTalks entitled, “Demystifying Equity Crowdfunding: What You Need to Know and Why It’s Here to Stay” to walk participants through the basics of leveraging this growth tool either as an entrepreneur or an investor.
Heading this panel were Mark Rodli, Business Development Lead at Wefunder; Steve Sy, CEO and Founder of Great Deals E-Commerce Corporation; Franco Varona, Managing Partner at Foxmont Capital Partners; Ananya Chandra, Managing Partner at Innopact; and RJ Oriel, Corporate Development Lead at Talino Venture Labs.
Moderating the discussion were Kat Chan, Executive Director of IdeaSpace and QBO Innovation Hub; and Winston Damarillo, CEO of Talino Venture Labs.
Equity crowdfunding in a nutshell
With equity crowdfunding “anyone with a credit card or a bank account can invest in early-stage startups,” said Rodli. He added that equity crowdfunding is mutually beneficial for both founders and investors, as the former can raise capital from their networks while the latter can get access to potentially high-growth companies.
“Equity crowdfunding is all about providing investment opportunities for everyone; this is aligned with Talino’s vision of developing financial inclusion technology for underserved markets,” explained Oriel.
According to Rodli, Wefunder goes beyond the government-mandated compliance requirements and conducts its own due diligence to ensure that all transactions are transparent and legitimate.
“We have matured as a startup just by going through Wefunder’s compliance process,” shared Damarillo.
A platform for wealth creation and distribution
Chandra said that equity crowdfunding benefits the general public in three crucial ways.
“First, it generates more innovation over time. More ideas get access to pools of capital that were previously unavailable. Second, it diversifies the kinds of innovation that we see. Third, it creates wealth and spreads that wealth. With equity crowdfunding, people with a lower net worth get to invest and diversify their portfolios.
“At Wefunder, investors can support startups they believe in for as low as $100. Startups in turn can raise anywhere from $50,000 to $5 million. It takes preparation and thoughtfulness to do a successful raise” said Rodli.
A gauge for public support—and long-term viability
“I see equity crowdfunding as a mini IPO,” said Sy. “A VC would be more than happy to invest in startups that have successfully raised capital through equity crowdfunding because it means that they have gained significant public support.”
For Varona, combining VC support with equity crowdfunding gives startups the best of both worlds. VCs provide mentorship while equity crowdfunding provides access to a massive investor network—investors who will push startups to constantly refine their products and services.
“How interesting would it be if a fundraising round would include actual clients of the venture that’s doing the raise?” he mused.
“Startups need people who can support their future capital requirements (VCs), people who can provide input on business and product strategies (corporates and fellow entrepreneurs), and people who can provide input on their products (end users). Equity crowdfunding connects startups with the last two,” said Chandra.
What’s in it for investors
How does investing in equity crowdfunding compare to crypto, stocks, Real Estate Investment Trusts (REITs), and Non-Fungible Tokens (NFTs)? Varona said that these are different investment instruments with different levels of risk, and should be viewed accordingly.
What’s important, Chandra noted, is that investors spread the risk across these asset classes. “Don’t put all your eggs into just the high-risk, high-return basket,” she advised.
But more than the potential to recoup a higher return, equity crowdfunding enables investors to leave a lasting impact as they support startups that dream of changing the world, one innovative idea at a time.
Learn more about Talino’s equity crowdfunding campaign here.