EquityNet is an equity crowdfunding platform connecting businesses to investors. The company was founded in Fayetteville, Arkansas, in 2005, years before the term “crowdfunding” became a buzzword. In fact, before the provisions of the JOBS Act were enacted in 2013 (thereby allowing companies to publicly solicit investors), EquityNet could only share companies’ pitches to investors privately. Upon the JOBS Act taking effect, EquityNet began allowing companies to publicly solicit funding on its platform.
Along with its crowdfunding platform, EquityNet also offers cloud software that allows you to build a business plan that will be viewable to investors and help them decide if your business is worth investing in. In fact, you don’t have to use EquityNet for fundraising at all — if you wish, you can just use the software to analyze and optimize your business planning. It’s the crowdfunding aspect of EquityNet I’m here to focus on, however.
Read on to learn more about this equity crowdfunding package.
The thing to remember about EquityNet is that it is a subscription service, not a broker-dealer. This means that EquityNet does not directly facilitate the exchange of funds — rather, it provides a platform for businesses and investors to find each other. Investments are made offline by the parties themselves. This means that while the name of the site is EquityNet, you can seek loans from investors as well as equity investments. You could even seek a grant if you think that’s a possibility.
EquityNet provides a number of paid features to subscribers as well as some free features to non-paying subscribers. Sign up with the site as a business, and for free, you’ll be able to set up and publish a business and funding profile as well as view “summarized” EquityNet investor profiles. You’ll also be able to “crowdcast” your business profile for free — “crowdcast” being a needlessly fancy term for emailing your business profile to your social media and email contacts.
The paid plan, which EquityNet says will result in your profile being viewed “quite a bit more,” gets you the following:
- Create a business plan
- Patented business planning tools
- Upload and share documents
- View expanded investor profiles
- Share your plan with thousands of investors
- Message investors
- View detailed activity
- Publish profile to partner sites
- Documents for fundraising
- See who has visited your profile
This package is offered on a monthly basis for $199/month, but you can get a discounted rate with a longer-term subscription. A yearly subscription will cost you just $139/month. You can also buy into three and six-month chunks for $179/mo and $159/mo respectively. Be aware that EquityNet plans auto-renew on their expiration date.
Note that while you can attempt to raise funds on EquityNet for free, you won’t be able to contact EquityNet investors or upload your business plan for them to view. You’d essentially be getting to post your business profile in the hopes that an investor might stumble across it and fund you (again, any monetary transactions must be handled offline — EquityNet doesn’t deal with that side of things).
I should also note that EquityNet warns on its homepage that its services cannot currently be used by anyone in Michigan. Sorry, Michiganders.
EquityNet states the following in their FAQ:
EquityNet is designed with flexibility to accommodate all ranges of private businesses, whether it’s an $100M/yr in revenue international biotech company, a pre-revenue one person software start-up, or a modest one-location coffee shop.
When you create a business profile and post it to EquityNet, it will appear immediately. No pre-approval required. EquityNet reserves the right to remove profiles, though they don’t state any particular criteria under which they would do so.
TERMS & FEES
Here are the terms and fees for EquityNet’s crowdfunding campaigns:
|Funding Duration:||No limit|
|Platform Fee:||None (though paid subscriptions are available)|
|Funding Terms:||Keep what you raise|
|Payment Processing Fee:||None (funds are collected offline)|
As EquityNet does not handle funds themselves (except to receive payment for their services!), there are no platform fees and no payment processing fees to contend with. However, to get the attention of the deep-pocketed investors on EquityNet, you’ll need a paid subscription to the service. Just keep in mind that if you succeed in conducting a large crowdfunding campaign, the subscription fees will amount to significantly less than the 5-10% taken out by platform/payment processing fees on other crowdfunding platforms.
As EquityNet deals in equity crowdfunding, I feel compelled to repeat the disclaimer I included in a previous equity crowdfunding platform review:
Bear in mind that equity crowdfunding is a still-evolving field, with the full impact of the JOBS Act still being assessed. Equity crowdfunding is a more complex proposition than, say, rewards-based crowdfunding, as investing is much more substantially regulated. Consult an attorney if you have any legal questions regarding the process, SEC regulations, etc.
Getting your business profile up on EquityNet is easy and painless as there is no pre-screening process. You’ll need a paid subscription to upload a full business plan with supporting documents onto the site, however. To really attract the attention of investors on the site, you’ll have to open your wallet.
SALES & ADVERTISING TRANSPARENCY
EquityNet makes it clear that it is not a registered broker-dealer and therefore does not handle financial transactions between investors and investees. They also provide a good deal of information about their business plan software and patented business plan analysis program.
CUSTOMER SERVICE & TECHNICAL SUPPORT
EquityNet provides a contact form for email support as well as an FAQ. You can also call EquityNet for assistance. I’ll give them props for providing a phone number to call — many crowdfunding outfits don’t do this.
NEGATIVE REVIEWS & COMPLAINTS
EquityNet doesn’t have much of a user review footprint online, though there are scattered user reviews and a number of professional reviews for the service.
Some criticisms include:
- Cost: EquityNet can be expensive for investment seekers, especially if your funding campaign doesn’t pan out.
- Hands-off: EquityNet’s policy of noninvolvement in the transactions between investors and entrepreneurs has been criticized as well, with reviewers questioning whether retail investors know enough to do the due diligence necessary to make successful investments.
- Quality control: There has been concern expressed over whether or not all the businesses listed on the site are properly registered with the FEC. ” EquityNet has also been accused of inflating the number of entrepreneurs and investors on the site in its promotional literature.
POSITIVE REVIEWS & TESTIMONIALS
PCMag was quite complimentary of EquityNet’s business plan software, noting that “The business plan it generates is attractive enough to make even the most modest start-up look good.” Taken as a whole, EquityNet gets more praise than jeers from reviewers.
EquityNet pairs a solid business plan creation/analysis package with a crowdfunding platform that pairs entrepreneurs with investors looking to make equity and/or debt investments in emerging companies. It’s a novel and innovative idea and one that holds appeal for a wide array of small businesses and startups. That said, if you want to take full advantage of what’s on offer and maximize your chances of funding success, the platform isn’t cheap. Nor is it terribly convenient, as the actual investing doesn’t take place via the website — you and the investor(s) will have to work it out.
Entrepreneurs looking into equity crowdfunding should know that it’s is a trickier field to navigate than rewards crowdfunding, what with all the legal issues involved. However, having helped businesses raise over $300 million from investors, EquityNet is definitely worth a closer look if equity crowdfunding fits into your grand plan.