Minority-owned startups are proving to be incredibly successful in gaining exposure on online platforms, growing their customer base and raising capital. In 2021, funding from crowd raising grew 33.7%, showing the increasing use of online fundraising.
A Lack of Diversity in Traditional Capital
Online platforms for startup investing are more inclusive than traditional options. They don’t rely as heavily on already established personal relationships and networks between founders and investors. Instead, they provide a level playing field for all types of founders online.
These entrepreneurs can now get the funding to launch or expand their businesses through RegA+ and RegCF. Online startup investing platforms are also transparent, allowing founders to see which startups are doing well and which ones aren’t. This information was often hidden from view by traditional VCs, which could lead to bias.
The Internet is Improving Equity Crowdfunding for Minorities
In 2020, only 2.6% of VC dollars were invested in minority-founded businesses. However, over $486 million were invested through online startups in 2021 – a significantly higher sum than traditional VC investment. Through regulations like RegA+ and RegCF, investors have the opportunity to invest in promising startups led by underrepresented founders. These online platforms level the playing field, allowing minority founders to receive the support and capital funding they need to succeed.
As more investors engage with these platforms and more promising startups seek funding through regulations, we will see continued growth in minority-founded companies receiving the support they deserve. Overall, online startup investing has the potential to create a more diverse and dynamic VC landscape – one that better reflects the diversity of several markets.
The Future of Online Funding
There are several reasons why online fundraising is such a valuable tool for minority entrepreneurs. In the past, minority entrepreneurs have often been shut out of traditional funding sources. Also, they have often been pigeon-holed into stereotypes by the mainstream media. But with online fundraising, they can bypass the traditional gatekeepers and structural obstacles, speaking directly to potential investors. They can tell their own stories and showcase the unique strengths of their businesses.
As the world becomes more digital, so too does entrepreneurship. This is especially apparent in how online fundraising is helping businesses of all sizes to raise money. It’s also becoming an increasingly important tool for these minority entrepreneurs.