That is the first advise we give you in The Hitchhiker’s Guide to Crowdfunding.
We are here to help and guide you through your journey in the galaxy of crowdfunding!
Literature references aside, crowdfunding may feel somewhat scary and unknown territory, but I assure you when you get to know what it is all about, you will jump to the opportunity and just wonder why you haven’t done it before.
Reward-Based Crowdfunding vs. Equity crowdfunding
The most significant difference between reward-based crowdfunding and equity crowdfunding is essentially this: in equity crowdfunding you buy a share of the business, in reward-based crowdfunding you buy the product that is designed, developed and produced.
If you want people (investors) to have an opportunity to become shareholders of your company, go with equity crowdfunding. That may present some issues in the long run, considering you are giving a wide birth to the spread of the company shares. If you want to make your company whole again sometime, doing that will be quite a hassle.
Reward-based crowdfunding especially on Kickstarter.com is a great tool to enter the US market! This crowdfunding is basically all about pre-sales: you sell a product that is not yet manufactured and not available in a brick and mortar store or online. You can place your product on a crowdfunding platform when it is just a design or prototype. Unlike equity crowdfunding, all you sell there is the product, not shares of your company. That is why the basic, reward-based crowdfunding is both more popular and in many ways better option for inventors and investors.
Just to point it out:
- The investor owns part of your business
- Legal but unpopular in Finland
- Only the product is for sale
- Basically illegal in Finland, do to old legislation
How can Finnish Companies Crowdfund?
There are limitations. Take Finland. The law in Finland sees crowdfunding always as equity crowdfunding and does not recognize the crowdfunding where no shares change owners. All in all, the reward-based crowdfunding is basically illegal in Finland for a Finnish company, because of some old laws.
Norded has good news for you! We can help! Through our service package you can bring your product to the most popular crowdfunding platforms Kickstarter and/or Indiegogo in the USA and gain international sales at the same. Crowdfunding is popular especially in the USA but also in Australia, Canada and many European and Asian countries.
Contact us and we will be happy to help you with everything you need to start your crowdfunding campaign!