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Debt-based crowdfunding has become a very viable alternative to funding for SMEs and property developers across Australia in recent times. Thousands of businesses from all sectors and various sizes have raised finance successfully through ‘the crowd’. Businesses have seen success by investing in crowdfunding opportunities, while investors’ hunger for crowdfunding investments is at an all-time high. Regardless, crowdfunding is a relatively new concept in the Australian market and doubters will always voice their opinions.

We had a look at the general misconceptions surrounding debt-based crowdfunding. Here are five myths debunked.

Myth #1: People will see you needing to raise and raising through online crowdfunding as bad for your brand

Wrong.  The fact that such a large amount of businesses are using crowdfunding to raise funds in today’s day and age makes this notion laughable. There is no shame in raising capital through debt based crowdfunding. None. It is the ideal funding model for most Australian businesses and real estate developers. Why would such investors place their hard-earned money in something they see as desperate? Crowdfunding has become a very viable and accepted method to raise capital – not the other way around.

Myth #2: Only businesses who can’t raise funds offline will raise online

Wrong.  Firstly, do you think you can reach more investors through the internet or through offline methods? CoAssets has a user base of over 50,000 investors who are instantly notified of your campaign. On top of this, your business is also marketed to these users, and even if the idea is now crowdfunded, whoever said no to free marketing?  Again, this is a crazy attempt at shaming debt-based crowdfunders.

Myth #3: Investors will never see any returns

Wrong.  This must be the biggest myth of all. For example, CoAssets, which has been debt-based crowdfunding for years has now successfully funded over 60 projects with 0 defaults at effective rates of 12-30% PA. That is S$43M successfully invested and S$200M in the pipeline with the highest degree of transparency and corporate governance.

Myth #4: Debt-based crowdfunders are unsophisticated

Wrong.  Users and investors of debt-based crowdfunding platforms, such as CoAssets, are generally high-net-worth individuals and sophisticated investors. CoAssets investors have an average salary of over $60,000 PA as well as a high level of education. CoAssets’ crowdfunding users also come from diverse backgrounds and expertise, which means they have diverse views regarding potential deals. This pooling of knowledge is surely a better approach than solo investors making their decisions alone.

If you have ever thought about or launched a crowdfunding campaign then no doubt one of these myths would have crossed your mind at some stage. One of the key priorities of CoAssets, and the crowdfunding industry, is to set the facts straight which will, in turn, lead to both businesses and investors having the necessary assurance to get involved and reap the benefits which crowdfunding can bring.

This article is written by the Crowdfunders Editorial Team. In Australasia, Crowdfunders.Asia is a leading portal on providing news related to crowdfunding, start-up, property and business. It is operated by CoAssets is Australia’s first and only listed real estate crowdfunding platform (NSX:CAX). 

If you have any questions, email us at [email protected] OR call us at +65 6532 7008

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