Our emerging business and technology practice represents early stage companies from initial start-up through maturity, including many that have chosen to raise financing through crowdfunding. In a recent article for Law360, Morgan Lewis emerging growth lawyers Andrew Ray and Joe Castelluccio draw on the group’s experience with crowdfunding early stage companies and offer four tips for approaching the decision to pursue crowdfunding and ways to approach the process.
- Traditional and crowdfunding financings often go hand in hand. The most successful offerings use both traditional financings and crowdfunding.
- Cast a wide net and think about potential investors as partners, not shareholders. The best early stage investors are those that can help a business group and have connections to industry and other investors and customers.
- Include good “external” advisers on your team. Include advisers with experience on recent crowdfunding deals, particularly to navigate the evolving landscape of federal and state securities regulation of crowdfunding.
- Understand the process, and plan for the post-financing future of a company. Both crowdfunding platforms and investors will want to see policed financials and complete records of the company’s formation and operations, and outside investors will demand greater accountability to compliance and corporate governance practices once the financing is complete.
Read the full article: 4 Crowdfunding Tips from the Trenches