Already on our 4th issue of Democratizing.Finance! It’s been 4 short months, and we’re sitting at about 40 readers, so thanks to everyone reading! Feel free to share so we can spread the word about Equity Crowdfunding!
Website & Social Media
First off, if you like this and want to talk about Equity Crowdfunding, investing, startups, StartEngine, and more check out these links below to follow it all month long! I write several times a week, regularly post on YouTube, and have a few groups to discuss these things, so make sure to join! I also recently launched a website, democratizing.finance, so sign up there and check that out to read all blog posts for FREE and get some free classes on Equity Crowdfunding!
Tip of the Month
Cash is King — As the downturn continues, cash is going to be king. Venture Capital markets are already slowing down, and Equity Crowdfunding is seeing slight and stagnant growth. This means funding is going to become increasingly competitive, and startups might not be able to rely on large, subsequent funding rounds. So, where does that leave investors?
Downturns can either make or break a startup. The downturn can discourage founders from starting up new businesses since times are bad, interest rates are high, and funding is scarce. Similarly, poorly managed companies will be affected by these same factors and end up going out of business. This all results in significantly less competition for those startups that do survive and primes them for massive growth opportunities once market sentiment shifts in a more positive direction.
This means looking for companies that have strong cash positions and low debt. Even better is if you can find companies that are profitable. or close to it. These are the companies likely to continue to succeed because they can sustain themselves and don’t have the pressure of bankruptcy.
State of the Market
Things have not been good, unfortunately. StartEngine and Wefunder are both reporting stagnant revenue growth and lower or stagnant raise amounts. Despite the total number of raises sitting close to all-time highs, total funding amounts are declining and sitting at multi-year lows. Here are some graphs from KingsCrowd that represent this a bit better:
As you can see, the total number of raises is climbing and is actually near an all-time high.