Rewards or Equity?

 

 

Fundable offers unparalleled flexibility for startups’ specific needs  allowing them to fund their companies through Rewards or Equity campaigns. Rewards campaigns are a great fit for startups raising smaller amounts of capital that have something of value (a compelling reward) that they can offer in exchange for funding. Equity campaigns are best utilized by companies that are looking for larger amounts of capital, and have gained enough traction to incentivize accredited investors with the opportunity to own a piece of the company.

Rewards

Rewards-based raises allow startups to provide an item of value in exchange for a capital commitment. For example, if a Backer commits $50, the startup may offer a copy of the product once it's produced (like a pre-order). Rewards-based raises do not offer any equity (company stock) to Backers.

Rewards raises are effective for smaller dollar raises (typically below $50,000). A startup will rely on commitments from current customers, personal support from their social network, or a very strong affinity from Backers who want to see the company succeed.

  • Typically less than $50,000
  • Pros: No equity offered, potential to inspire large public outpourings of support
  • Cons: Harder to raise large sums of capital, cannot collect any capital if goal is unmet

Equity

Companies have been exchanging equity for capital since the dawn of commerce. When offering equity, startups make a pre-determined portion of the company available in exchange for capital.

Equity raises are typically more than $50,000 and utilized by companies looking for larger sums of operating capital to move their business forward. Also, some businesses do not have a developed product or service that they can market through a Rewards raise, so offering equity is their best bet for raising funding.

  • Typically more than $50,000
  • Pros: Allows for large capital raises
  • Cons: Must give up equity; solicit larger commitments from accredited investors