- December 12, 2021
- Posted by: Robert Brown
- Category: Investing
If you are into crowdfunding, you may have a lot of questions on your mind regarding this system of raising funds. One of the most common questions is related to the amount of money you can raise on a crowdfunding platform. In this article, we are going to answer this question. Read on to find out more.
On the web, you may have gone through insights and experiences of industry leaders, experts, and fundraisers. But as far as the maximum amount is concerned, 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?
First of all, regulatory authorities are responsible for setting and tone and defining the limit as to how much capital can be raised. Authorized crowdfunding platforms offer their services following specific rules, and they don’t exceed the maximum amount of money raised through the portal.
Generally, they stated this limit in the FAQ section or on a webpage on the crowdfunding platform. Given below are some statistics:
Before 2021, startups were allowed to collect $1,070,000 annually with Regulation Crowdfunding. However, the limit has been increased to $5M, 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 like Wefunder allow you to run Regulation A+ campaigns, free of charge. And you can collect up to $1 million at most.
Also, if you don’t know anything about the American regulation alphabet, you can go through the simple terms that are given below:
Reg A: it allows you to raise between $20m and $75 via Mini-IPOs, which is ideal for small issuers and young companies.
Reg D: It consists of a set of rules for large campaigns and projects that require a stream of unlimited funds. In such deals, only big players can take part.
Reg D: it enjoys more popularity unlike debt offerings and public equity. Generally, these campaigns are run through private funds, tech companies, and real estate.
Reg CF: It’s an ideal framework for startups that attract the attention of the public for capital collection.
According to the reports released by The Crowdfunder, the average amount collected against each Reg CF offering was $342k in 2020.
As far as crowdfunding is concerned, only the sky is the limit if the limit is not regulated by an authority. Actually, the average amount collected via crowdfunding platforms varies depending upon the country, platform, and niche. So, no matter what type of startup you have launched, you can initiate a crowdfunding campaign to raise capital for your business and get it off the ground.