If you like crowdfunding, you may have many questions in your mind regarding this fundraising system. 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. Keep reading to know more.
On the web, you may have consulted the 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?
Regulation limits
First of all, the regulatory authorities are responsible for setting, tone and define the limit of how much capital can be raised. Authorized crowdfunding platforms offer their services following specific rules and do not exceed the maximum amount of money raised through the portal.
They usually indicated this limit in the FAQ section or on a web page on the crowdfunding platform. Here are some statistics:
Before 2021, start-ups were allowed to raise $1,070,000 a year with the Crowdfunding Regulations. However, the limit has been raised 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 like Wefunder allow you to run Regulation A+ campaigns, free of charge. And you can collect up to $1 million maximum.
Also, if you know nothing about the American regulatory alphabet, you can read the simple terms listed below:
Reg A: allows you to raise between $20-$75 through Mini-IPOs, which is ideal for small issuers and young companies.
Reg D: Consists of a set of rules for large campaigns and projects that require unlimited cash flow. In such deals, only the big players can participate.
Reg D – Enjoys more popularity than debt offerings and public shares. Generally, these campaigns are run through private funds, technology companies, and real estate.
Reg CF: It is an ideal framework for startups that attract the attention of the public for raising capital.
According to reports published by The Crowdfunder, the average amount raised from each Reg CF offering was $342,000 in 2020.
to wrap
When it comes to crowdfunding, only the sky is the limit if the limit is not regulated by an authority. In reality, the average amount raised through crowdfunding platforms varies by country, platform, and niche. So, no matter what kind of startup you have launched, you can start a crowdfunding campaign to raise capital for your business and get it off the ground.