If you are involved in crowdfunding, you may have many questions in your mind about this fundraising system. One of the most common questions is about the amount of money you can raise on a crowdfunding platform. In this article we will answer this question. Read on to learn more.
On the web, you may have gone through the insights and experiences of industry leaders, experts and fundraisers. But as for the maximum amount, it can be up to millions of dollars. So the question is, what is the average amount of capital that can be raised through crowdfunding?
Regulatory limits
In the first place, regulators are responsible for setting both the tone and the limit on how much capital can be raised. Authorized crowdfunding platforms offer their services according to specific rules and they do not exceed the maximum amount of money collected through the portal.
In general, they indicate this restriction in the FAQ section or on the crowdfunding platform’s website. Below are some statistics:
Prior to 2021, startups were allowed to raise $ 1,070,000 annually through regulatory crowdfunding. However, the limit has been increased to $ 5 million, which is good news for startups.
If you follow Regulation D, you can raise as much money as you can from accredited investors. Some platforms, such as Wefunder, allow you to run A + campaigns for free. And you can raise up to $ 1 million.
Also, if you know nothing about the American regulatory alphabet, you can go through the simple terms given below:
Reg A: allows you to raise between $ 20 million and $ 75 through a Mini-IPO, ideal for small issuers and young companies.
Reg D: It consists of a set of rules for large campaigns and projects that require a flow of unlimited funds. Only big players can participate in such deals.
Reg D: it is more popular than debt and public capital. These campaigns are usually run through private funds, technology companies and real estate.
Reg CF: This is an ideal framework for start-ups that attract public attention to raise capital.
According to reports published by The Crowdfunder, the average amount raised against each Reg CF proposal is $ 342k in 2020.
Summarizing
As far as crowdfunding is concerned, only the sky is the limit if the restriction is not regulated by an authority. In fact, the average amount raised through crowdfunding platforms varies by country, platform and niche. So, no matter what type of startup you start, you can initiate a crowdfunding campaign to raise capital for your business and start it.