Does crowdfunding capital raise discourage future VC investment? We are getting this question a lot because there are way more ways to access capital these days than the traditional VC route, so startups are taking advantage of this. They are doing crowdfunding campaigns and raising equity capital from Republic or Wefunder.
However, one reservation many founders have, and they’re asking us, is, “if we do a crowdfunding campaign and have this SBV with many members. Is this somehow going to discourage VCs from investing in our company further?”Founders are concerned about the legal aspects. They are worried about branding or maybe too many communication aspects.
My simple answer is no. Crowdfunding is not going to discourage VCs from investing in your company going forward.
- Crowdfunding has become very popular with early-stage startups
- Crowdfunding does not discourage VCs
- Any VC’s primary goal is to invest in great companies
And actually, this is becoming more mainstream all the time. Venture capitalists just care about investing in great companies.
What makes a great company?
- One with traction that has momentum
- Customers love it, and revenue is being generated
- It can be turned into a billion-dollar business
That is all venture capitalists care about, assuming your compliance has been done correctly. You’re not violating any of the crowdfunding stuff or any of the SEC laws, but venture capitalists, they’re just looking for the best companies. And they’re very, very good. It is their job to get money into your company.
VCs are not going to be deterred if you’ve done a crowdfunding campaign.
In actuality, one of the great things about crowdfunding campaigns is that they can raise your company’s brand awareness and help you discover and find more customers. Should you have any questions about venture capital funding, or need startup accounting assistance, reach out to us. Our clients have raised over $4.5 billion in venture and seed financing, and our Kruze team knows how to navigate the VC diligence process - you can also get our venture capital due diligence checklist for free!