Reg CF | Reg A | Crowdfunding | Shop Fund | Characteristics of a Successful Crowdfunding Campaign
Cost Comparison of Crowdfunding Sites
Typical costs of crowdfunding sites In the United States of America, there is an increasing trend of investing via crowdfunding sites. These investments help an investor get higher returns and fulfill the need of a business to get public finance. So. A successful cycle of crowdfunding results in a mutual benefit for both entrepreneurs and investors.In this article, weâve discussed the cost to raise the finance by using these sites. 1- Wefunder platform The Wefunder business with an intention to raise finance can register its company on this platform free of cost. They charge a certain percentage on the finance actually raised. For instance, On Reg CF, a 7.5% fee is charged on the total finance raised. Similarly, on Reg A+, a flat fee of 7.5% is charged on the total amount of $5 Million.However, the business has to pass through a certain vetting process for getting listed on the platform. As of now, 897,154 investors have successfully raised finance with this financing platform.
Site name
Company creation
Reg A
Reg A+
Wefunder
Free
7.5% of the total fundraise
$375k, 7.5% of the $5 million raise
$100 is the minimum amount of investment that can be made via this platform.
2- Republic platformRepublic is a well-known platform for companies intending to raise finance for video games development, real estate, and crypto. The start-ups need to pay 6% on the total amount raised with 2% as a Crowd Safe. Some other fees payable include filling out Form C and escrow agent fees amounting to $1500 each. For instance, if the start-up raises $100,000 through this platform, the start-up has to pay 6% $6,000 (100,000*6%) as a fee and additional 2% amounts to $2,000 (100,000*2%). So the total fee payable is 8,000, and additional $3,000 has to be paid for filing of the form-C and for the escrow agency.
Site name
Fee on funds raised
Crowd safe
Investment choices
Republic
6%
2%
Real estate, video games, startups, and crypto
The minimum investment required by an investor for this platform is $10, and the good news for investors is that there is no processing fee. Further, the investors can opt to invest in the different options that include real estate, video games, cryptocurrency, and different startups.
3- StartEngine
StartEngine offers two programs for raising finance. These programs include Regulation Crowd Funding and Regulation A+. Both options fall under JOBS â Jumpstarts Our Business Act. Under Regulation, the crowdfunding limit of raising the amount is $5 million for every 12 months, and for Regulation A+ is $75,000,000 for every 12 months.
Investment options
Amount raising limit
Financial review/legal cost, if finance to raise is < $1.07 million
Financial review/legal cost, if finance to raise is > $1.07 million
Start engine fee
Regulation crowdfunding
$5 million
$4,000-$5,000
$4,000-$5,000 + audit fee
7% to 12% of the amount raised + additional 2% + $10,000 as deferred revenue on completion of offering.
Regulations A+
$75 million
$4,000-$5,000
$4,000-$5,000 + audit fee
7% to 12% of the amount raised + additional 2% + $10,000 as deferred revenue on completion of offering.
There is no fee for an investor to subscribe to the shares on this platform. However, in some cases, the startups can opt to offset the cost by having investors pay a fee amounting to 3.5%.
4- Seed invest
The businesses applying for the registration have to pass through a comprehensive due diligence process. They've accepted just less than 2% of the startups that applied for the registration. The platform has raised more than $300 million, which makes it the largest finance-raising platform and explains the platform's credibility in the eyes of investors.
Another good thing about this platform is that the startup only needs to pay a fundraising and placement fee if the company successfully raises the pre-set amount of the investment. We recommend opting for seed investment if you need to get a higher amount.
In addition to this, there are three different ways to raise the finance that include Regulation D (Accredited only), (Side by Side), and Regulation A+ (Mini-IPO). These fundraising options have different duration of launch and amounts of investment.
Site name
Minimum investment
Fundraising Fees
Investment choices
Seed invest
$500 - $10,000
7.5% placement fee and 5% worth of equity
Different startups
The minimum requirement for investment is $500, which means an investor with limited availability of the funds can opt to diversify their investment portfolio.
5- Net capitalThis platform is well known among startups focused on innovation and data analytics. Although, some other sectors include mobile, technology, products, SaaS, residential real estate, pets, etc. Other than fundraising fees, other fees include escrow fees and other fees for procedural compliance.The fee charged from the raise of the capital is comparatively lower. However, startups have to pass through a vetting process and show the growth potential of the business.
Site name
Minimum investment
Fundraising Fees
Investment choices
Net Capital
$99
4.9% of the amount raised
Focused on innovative startups
The investors are not charged any fee for the subscription of the shares. On the other hand, as discussed, the platform earns its revenue from the start-up that wants to raise the finance.
6- Honeycomb creditItâs one of the best sites to raise finance if youâre a small investor. There is no cost of registration, and the maximum finance that can be raised amounts to $250,000. They also charge a certain amount of the fee depending on the case. Further, they are always ready to consult startups regarding their usage of the funds.
The investors have to pay a 2.85% fee on the total investment in the startup, but it's limited to $37.25 in total and does not exceed irrespective of the investment amount. Further, one can invest an amount as low as $100. So, an investor got an enhanced capability to diversify as they can invest small amounts in different startups that help reduce the risk. Further, the investors have generated 5%-12% on by investing in local businesses through Honeycomb Credit.
