Alternative finance for small businesses
No equity, no loans, only money
Businesses need startup capital and along the way, if they plan to expand their operations they would need an infusion of capital to do so too.
If the current stakeholders in small businesses are unable to chip in with the required finance they would need to look elsewhere to raise the needed capital.
Going to a bank for finance would generally entail some collateral acceptable to the respective institution to be deposited before a loan could be approved. Without them banks are constrained by financial regulations to lend to any business because the banks are responsible for it, hence they cannot take risks when they lend.
Read also: Revenue vs Equity Crowdfunding
In such context, small businesses that are flourishing and need to expand would have to seek Alternative Finance of which there are many options that they could raise such funding from and which would be low risk for the prospective investors as well as for the small businesses themselves.
If the small businesses have a wide and loyal customer base that could be one area that they could look for alternative finance and which is referred to popularly as revenue-sharing crowdfunding.
Getting together loyal customers is an integral part of the growth of smallbusinesses and raising money without loss of control by using revenue-sharing crowdfunding. Loyal customers would also tend to increase their commitment to the business by proactively engaging in purchasing what they need and even acting as silent marketing agents for the business promoting the business among their friends and other acquaintances.
The revenue share option gives flexibility to the business without the sword of Damocles hanging over it, where you commit to paying back prospective investors from the revenue that is generated from the small businesses.
In this context when the revenue is high for a particular month you pay more and when business drops you pay less and the investors are not bothered what profit you make but only concerned what the monthly revenue is because their return on investment is limited to a percentage of revenue.
This is a major advantage for small businesses as they are not under undue pressure financially to ensure that fixed monthly payments are made without default to settle the finance received in raising capital.
In the case of profit sharing unlike in revenue sharing, there could be a very slight twist where you would need to disclose profit margins to the prospective investors and they would be party to confidential information that the original stakeholders would like to keep for themselves.
The other would be that the investors would be more concerned about what profit the small businesses are making rather than the business itself because their return on investment is tied to the profits generated.
Revenue-sharing crowdfunding secures a comfortable growth base for small businesses without having to give up control over the ownership of the company. Crowdholding.com is the first revenue-sharing crowdfunding platform.
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Reward Distribution Rules.
Please read below how the rewarding structure works.
Voters get 35% of the reward
Commenters still receive the majority of 65% of the reward weight, while voters 35%.
You receive only 7 upvotes and must vote what you think are the best answers
You now have a limited amount of upvotes. You won’t see the other user votes until the task expires. If you vote the top half comments you will receive a portion of the 35%.
Top 50% upvoted comments get bigger share
Our algorithm gives top 50% upvoted comments more rewards than the bottom 50% comments.
Give me an example with numbers
Upvoters get 35 % of the reward.
65 % goes to the commentors.
Half of the reward is gained from bottom 1/2.
Upvoters get nothing
1/2 of the reward pool for this segmentis distributed among top 1/2
There is a task with 1000 Reward.
Let’s assume Top 1/2 recevies 70% of all upvotes.
Bottom gets 30 %. But because half of the reward goes to Top 1/2 that makes the final numbers more like Top 1/2 gets 85% (55.25% for commentors, 29,75% for upvoters) and bottom gets 15 % of the final reward.
If there’s 100 upvotes:
1 upvote that upvotes a comment in Top is worth around 12 Yups (circa 8 goes to commentor, 4 goes to upvoter)
1 upvote that upvotes a comment in Bottom is worth 5 (All goes to commentor).
Reminder about our Moderation
If you upvote a comment that’s reported as Spam or comment that should not be rewarded (eg. “Good job” comments) you will lose your right to be rewarded for this task.
We hope you like this new system and it brings you lots of fruitful discussions and reward you fairly.
Do you still have questions? Read more detailed explanation at our helpdesk
All the best,
Your Crowdholding Team