A case study on alternative crowdfunding featuring a punk band who wanted to play by their own rules
Equity crowdfunding is a powerful tool that companies have used to fund ventures in real estate, electric car production, digital games, and food products. It allows businesses to raise capital on their own terms, leveraging the power of the people to back an idea, instead of seeking support or investment from a single source. As a regulated method of raising funds, equity crowdfunding issues investors shares in the venture.
But equity crowdfunding is not just a valuable tool for those seeking to build or scale a company. Alon Goren, co-founder of DraperGorenHolm, Crypto Invest Summit, LA Blockchain Week, and 805 Startups, illuminates how he used equity crowdfunding to start a punk band.
The rise of the band (and the funds!)
What began as a typical boy-band-in-the-garage type of origin story quickly shifted into a powerful equity crowdfunding use case. “I was in punk bands growing up …. and we discovered that there was a band fundraising site that gave out royalties as a reward for participating. It was quickly shut down because of perceived securities issues that regulators assumed, but seeing something like that changed the game for us; we knew what we wanted,” said Goren.
The massive amount of competition in the music industry can make it difficult to break in and stand out. This is especially true for those who would rather not partner with a record label to get the funding needed for album production and promotion.
Turns out, equity crowdfunding was an ideal solution for Goren’s band. “A record label is BS... The band should have control over their music and production. Let bands and let people set their own terms in regards to raising money,” said Goren.
Equity crowdfunding offers artists a more independent way to raise capital for their projects, without having to deal with the potential creative clashes that labels and artists can face. When Goren saw how the band fundraising site worked, he realized that equity crowdfunding was the answer that his band had been looking for: it gave them more control over their creative and financial choices -- a win-win scenario. Goren explained that that’s the point of equity crowdfunding, “we don’t need all these rules to make money.”
The impact of crowdfunding
Across industries and ventures, equity crowdfunding continues to have a significant impact. In 2020 alone, Regulation CF campaigns raised nearly $215 million, a 105% increase from 2019, supporting 1035 new companies, according to data from Crowdwise.
FundAmerica by Prime Trust provides the financial infrastructure for equity crowdfunding platforms like the one Goren used. This infrastructure gives crowdfunding platforms the option to accept crypto, facilitating the crypto on-ramp and crypto-fiat conversion required for investors to participate in an offering. Not just that, FundAmerica by Prime Trust offers the complete payment rails, custody, and compliance solutions for crowdfunding platforms to operate.
With FundAmerica by Prime Trust’s capital raise infrastructure, equity crowdfunding platforms can launch and scale quickly and compliantly. Want to learn more about how you can build and scale your own equity crowdfunding platform? Visit fundamerica.com.