Why become a startup Investor

Equity crowdfunding is a method that allows everyday investors, from varying income backgrounds, to invest in early-stage and growth-stage companies in exchange for part-ownership of the business (I.E. Equity). This type of crowdfunding is different from pre-order or rewards-based crowdfunding, which we are currently doing with crowdbazaar on our live platform.
Traditionally, capital raising was dominated by wealthy people, venture capitalists and angel investors. But with equity crowdfunding, everyone can select, invest and become part-owners in start-ups, early-stage and growth-stage companies that they feel passionate about.

Seed Stage

Seed stage companies are simply startups in their pre-revenue stage. They raise funds to develop an idea, concept, product or service.

Early Stage

Early stage companies generally have a tested prototype or service model. At this stage, the company may be generating some revenues.

Growth Stage

Growth stage companies are operational with an existing customer base. They experience solid growth, but may not be necessarily profitable.

By investing in seed, early or growth stage companies, you get a chance to support a company which is doing something you really believe in and even make money from it. At Crowdbazaar, we want to give you (the ‘crowd’) a chance to invest in companies which are making an impact.

Once you have invested in the company and the offer is finalised and completed, you will become a shareholder in that company and you will be entered into the company’s share register.

Sky is the limit. But every company generally has a minimum and maximum cap per investor.  In some cases, you need to meet certain criteria to be “eligible” to invest.

Investing in these types of companies is risky. Even if you strongly believe in the success of the company, your investment is unlikely to be liquid very soon. This implies that you may not be able to sell your shares quickly (if at all). PS you must be prepared to lose every rupee or dollar you’ve invested and only allocate a small proportion of your investible income into startups and early-stage companies.

We cannot stress more on this. Unlike others, who might sell you dreams of getting rich quick, we aim to be transparent and keep you well-informed. Most startups fail or do not deliver positive returns to their shareholders. Invest as much as you are willing to lose. Even if a business succeeds, your investment could be illiquid for a long time and if the company goes through additional rounds of capital fundraising, the equity you hold in that company may become smaller (diluted).

You can sell your shares in the business is if the business makes an ‘exit’. An exit can be in the form of:-

• Initial Public Offering (IPO) – The company grows and decides to list on the public stock market. Investors will then be able to sell their shares on the stock market.
  
  
  
• Buy-Out – Another company decides to buy out or takeover the company. Investors will be paid for their stake held at the purchase price.
  
  
  
• Share Buyback – Management of the company may decide to buy back equity (shares) from its investors. This normally requires majority shareholder approval.
   
• Transfer of Shares: You may also consider transferring of your shares (and it's right) to someone else, however it maybe conditioned on your SHA (ShareHolder Agreement) or may require Board or majority shareholder approval for same.  
• Dividends – If a company becomes profitable and needs no additional growth capital externally, it may begin to pay dividends to investors.