Equity Crowdfunding - What Is It and Why Should You Be Interested?
It’s easy to get caught up in the excitement of the latest and greatest tech startup, or the new celebrity-endorsed brand. But as we struggle through this pandemic, we’re embracing a renewed appreciation for the simpler things in life, those vital staples of humanity that we normally take for granted...like toilet paper...or household cleaners. From an investment perspective, these boring, commonplace products suddenly have taken center stage as the DOW rollercoaster gets more and more shaky.
Need some proof?
Well, here at SunState Laboratories, makers of DAZZ, we’ve seen a 300%+ increase in sales since the pandemic began. According to our CEO, David Shahan,“With store shelves being empty and consumers shopping more online, people are discovering DAZZ at a rate much quicker than we ever imagined and[...]these new customers will come back and buy again and again as they run out.”
So you’re probably wondering why this matters to you. Well, for everyone who is concerned about the recent plummets in the traditional stock market, here’s some good news: there’s now an easy way to invest in thriving small businesses like ours, and it’s called equity crowdfunding. It’s important to note that this is very different from traditional crowdfunding (think Kickstarter or Indiegogo), where you make a “donation” to the business in exchange for some kind of perk...if/when the company got that far.
With equity crowdfunding, you have the opportunity to buy actual stock in a startup company, not just make a donation. Investing in early-stage startup companies used to be limited to high net worth, accredited investors, but equity crowdfunding opened the doors to everyone regardless of income or net worth.
Still with us? Good.
So, the upside of equity crowdfunding is the investor becomes a stockholder and, if the company goes public or is acquired, they have the potential to share in that windfall. Startup companies are fresh and exciting (trust us, we would know), with a lot of potential for growth. Equity crowdfunding investors have the opportunity to experience and reap the benefits of that growth...plus, it’s pretty nice knowing you’re helping the scrappy little guy along the way.
The downside (yeah, there’s a downside, but such is with any promising new idea) is the risk of investing in startups, with no secondary market (think the New York Stock Exchange) for selling or trading these types of stocks. Investors should carefully investigate potential companies, and pay particular attention to the company’s exit strategy (aka a business’s plan for eventually selling ownership). Plus, when dealing with small startups, there’s usually just two paths: wild success or stunning failure.
Ok but really, what does this have to do with DAZZ?
Glad you asked! Equity crowdfunding finds its home on online platforms, and one of those platforms, Wefunder.com, features SunState Labs as a company to invest in! We launched our equity crowdfunding campaign on Wefunder in mid-February, and we’ve already raised nearly $700k from 650 investors (not to brag, but also kind of to brag). The campaign is set to end on July 3, 2020, but at our current rate of raising money, we’ll probably reach our $1,070,000 campaign goal as early as late May or early June.
Wefunder, “the Kickstarter of investing,” offers opportunities to invest in everything from neighborhood nightclubs to distilleries to apps for online tutoring. According to Jonny Price, Wefunder’s Director of Fundraising, "Equity crowdfunding allows everyday people to invest in private companies[...]We aspire to help people build wealth through investing in companies that they previously lacked access to.” Basically, it’s like the resurgence of the old-fashioned American Dream...except with the Internet.
If you head over to this link, you’ll find our Wefunder campaign page, which gives a bit of background on the history of SunState Labs and talks about what it’s like to invest in us. If you’re interested in SunState and DAZZ, or even if you just want more information on this whole equity crowdfunding this, go check it out! While you’re at it, take a look at some of the other startups available to invest in...as Wefunder advises in their FAQ section, the best way to minimize the risks of investments is to diversify.
Just don’t invest in our competitors (*wink, wink*).