What is Raising Capital Online?

Raising capital online has gained immense popularity in recent years due to its accessibility, efficiency, and potential to reach a global pool of investors. By leveraging digital platforms, businesses can showcase their offerings to a wider audience, streamline the capital-raising process, and build an engaged community that’s  invested in their success.

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When raising capital online, businesses leverage dedicated platforms to:

• Showcase their investment opportunities to a wide audience
• Process investments digitally, often in smaller amounts than traditional raises
• Engage with potential investors through digital marketing and communication tools
• Manage investor relations and reporting through integrated online systems

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This approach differs from traditional fundraising methods by:

• Expanding the potential investor pool beyond venture capitalists and angel investors
• Streamlining the investment process through technology
• Allowing for more flexible funding structures and investment amounts
• Providing opportunities for retail investors to participate in private company investments

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Raising capital has gained significant traction in recent years, largely due to regulatory changes like the JOBS Act. These changes have opened up new avenues for companies to solicit investments publicly, democratizing the capital raising process. Historically, investing in private companies was restricted to accredited investors—high-net-worth individuals, institutional investors, and other financial professionals. Today, the landscape has shifted dramatically.

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This shift comes at a crucial time. Venture capital deal counts have been hovering near multiyear lows for over eight quarters, and even in the best market conditions, only a small fraction of venture capital is deployed to companies founded by women, minorities, LGBTQ+ individuals, or teams located outside major tech hubs. Interestingly, these underrepresented groups have shown substantially higher success rates when raising capital through digital platforms.

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Platforms like DealMaker have further revolutionized the process, offering end-to-end solutions that empower businesses to raise capital efficiently and on their own terms. These platforms provide the tools and infrastructure needed to reach a broader investor base, manage the fundraising process, and maintain investor relations—all in a digital environment.

Whether you're a startup seeking seed funding or an established company looking to fuel growth, raising capital online offers a powerful alternative to traditional fundraising methods. It provides access to a wider pool of investors, offers more flexible funding structures, and can be particularly beneficial for businesses traditionally underserved by conventional venture capital.

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In the following sections, we'll explore various ways you how raising capital online can work, key considerations for choosing a platform, and strategies for running a successful campaign. This guide will equip you with the knowledge and tools to navigate this new frontier of fundraising effectively.

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Why Choose to Raise Capital Online?

The advantages of online capital-raising over traditional methods are numerous and compelling:

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• Unprecedented Accessibility: Online capital-raising opens your doors to a global pool of investors, including accredited investors, institutional investors, and retail investors passionate about your industry or mission. This vastly expands your potential investor base and increases your chances of securing the necessary funds.
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• Streamlined Efficiency: Online platforms automate and streamline many aspects of the raise process, significantly reducing the administrative burden on your team. From investor onboarding and KYC (Know Your Customer) checks to payment processing and document management, these platforms handle the heavy lifting, allowing you to focus on growing your business.
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• Cost-Effectiveness: Compared to traditional funding methods, online capital-raising can be more cost-effective. You can save on expenses associated with roadshows, printing prospectuses, and engaging intermediaries. Another key consideration: when you go the traditional route, you might spend tens of thousands of dollars and months of valuable time pitching VCs and institutions, only to be told “no” by all of them. This happens more often than you’d think—and it’s a colossal waste of resources for those companies.
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• Targeted Marketing: Some online platforms offer sophisticated marketing tools that allow you to target specific investor demographics based on their interests, investment history, and—if you raise with DealMaker—their position in the checkout funnel. This targeted approach can significantly improve your lead generation and conversion rates.
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• Community-Building: Online funding platforms often have built-in features that facilitate communication and engagement with your investors. This can help you build a loyal community of supporters who are invested in your success and may become valuable brand advocates. By nurturing these relationships, you can tap into a network of individuals who can provide valuable feedback, referrals, and ongoing support.
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• Faster Funding: Online capital-raising can be significantly faster than traditional methods. With the ability to reach a wider audience and streamline administrative tasks, businesses can secure funds more quickly, allowing them to focus on executing their growth plans and achieving their goals.
• Increased Transparency: Online platforms promote transparency by providing investors with easy access to information about the offering, the company, and the terms of the investment. This transparency helps build trust with potential investors and can lead to more informed investment decisions.

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How Can I Raise Capital Online?

In the United States, there are three primary ways to raise capital online via different offerings available to businesses:

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Regulation Crowdfunding (Reg CF):

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Enacted under the JOBS Act of 2012, Reg CF allows businesses to raise up to $5 million per 12-month period from both accredited and non-accredited investors.. This offering type is ideal for early-stage startups seeking seed funding and companies with a strong consumer following. Reg CF offerings are conducted through registered funding portals or broker-dealers and require certain disclosures and ongoing reporting.
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Regulation A+ (Reg A):

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‍Reg A offers two tiers for raising capital. Tier 1 allows businesses to raise up to $20 million from both accredited and non-accredited investors.Tier 2 allows issuers to raise up to $75 million, but has more stringent requirements. Reg A requires audited financial statements and ongoing reporting, making it suitable for more established companies seeking growth capital. Reg A offerings must be qualified by the SEC and may require state-level registration, depending on the tier and the states involved.
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Regulation D (Reg D):

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Reg D is a private placement exemption that allows businesses to raise an unlimited amount of capital from accredited investors. It offers more flexibility than Reg CF and Reg A but is typically used by companies with established investor relationships and a proven track record. Reg D offerings can be conducted under various rules, such as Rule 506(b) or Rule 506(c), each with its own requirements for accredited investor verification, general solicitation, and filing requirements with the SEC.

Choosing the Right Platform to Raise Capital Online

Selecting the right online capital-raising platform is a critical decision that can significantly impact the success of your fundraising campaign. Here are some key factors to consider when choosing a platform:

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• Compliance: Ensure the platform is fully compliant with all relevant securities regulations and has a strong track record of compliance. Non-compliance can lead to legal issues and jeopardize your campaign. Look for platforms that have experienced legal teams and robust compliance procedures—and keep an eye out for platforms that have been sanctioned by regulators in the past.
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• Technology: Evaluate the platform's technology infrastructure. Is it user-friendly, secure, and capable of handling high volumes of traffic and transactions? The platform should provide a seamless experience for both businesses and investors, with features like easy document uploading, secure payment processing, and real-time campaign tracking.
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• Marketing Support: Assess the marketing tools and resources the platform offers. Do they provide assistance with marketing your offering, reaching potential investors, and building a community? Look for platforms that offer customizable landing pages, email marketing tools, sophisticated data dashboards, and full-funnel transparency.
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• Fees: Understand the platform's fee structure. Some platforms charge a percentage of the funds raised, while others may have flat fees or subscription-based pricing. Make sure you have a clear understanding of all costs associated with using the platform—and remember that you get what you pay for.
• Customer Support: Does the platform offer responsive and knowledgeable customer support to assist you throughout your raise? Look for platforms with dedicated account managers, comprehensive onboarding resources, and prompt support channels to ensure you have the guidance and assistance you need at every stage of your campaign.

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DealMaker, a pioneer in online capital-raising, excels in all these areas. Our platform is built by leading capital markets lawyers, ensuring rigorous compliance with securities regulations. We leverage cutting-edge technology to provide a seamless user experience for both businesses and investors. Our marketing experts can help you craft a compelling campaign and reach the right audience. And our dedicated customer support team is always available to answer your questions and guide you through every step of the process.

How to Build Your Investor Community

Building a strong investor community is essential for long-term success in online capital-raising. Your investors are not just sources of capital; they can become brand advocates, loyal customers, and valuable sources of feedback. Nurturing these relationships is key to maximizing the benefits of a digital raise.
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Here are some strategies to build and engage your investor community:

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• Regular Communication: Keep your investors informed about your company's progress through regular updates, newsletters, and social media posts. Share both good news and challenges, and be transparent about your goals and milestones. Consistent communication helps build trust and keeps investors engaged in your journey.
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• Transparency: Be open and honest about your company's financials, risks, and challenges. Provide clear and comprehensive information in your offering documents and ongoing communications. This builds trust and credibility with your investors and demonstrates your commitment to transparency.
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• Engagement: Encourage engagement with your investors through Q&A sessions, webinars, surveys, and social media interactions. Ask for their feedback and opinions, and show that you value their input. This two-way communication helps foster a sense of ownership and belonging among your investors.
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• Rewards and Perks: Offer exclusive rewards or perks to your investors, such as discounts on your products or services, early access to new offerings, or invitations to special events. These gestures show your appreciation for their support and can foster a sense of loyalty and long-term commitment to your company.
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• Community Events: Host virtual or in-person events for your investors, such as annual meetings, product launches, or networking opportunities. These events provide a platform for investors to connect with each other and with your team, strengthening the bonds within your community.
• Ongoing Education: Provide educational resources to help your investors understand your industry, your company, and the investment process. This can include blog posts, whitepapers, webinars, or industry reports. By empowering your investors with knowledge, you demonstrate your commitment to their success and help them make informed decisions.
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DealMaker's Engage platform is a powerful tool for building and nurturing your community. It provides a centralized hub for communication, engagement, and investor management, making it easy to keep your audience informed, engaged, and invested in your success. With features like customizable investor portals, secure document sharing, and built-in email campaigns, Engage simplifies the process of building and maintaining relationships with your investors, followers, and fans.

Understanding Compliance and Regulations When Raising Capital

Regulatory compliance is a non-negotiable aspect of online capital-raising. Failure to comply can result in legal repercussions, financial penalties, and damage to your company's reputation. Understanding and adhering to the relevant regulations is crucial to protect both your business and your investors.
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Here's a brief overview of the key regulatory considerations for online capital-raising in the United States:

1. Regulation Crowdfunding (Reg CF): Companies must file Form C with the SEC, adhere to advertising and disclosure requirements, and ensure none of their investors commit more than their annual maximum. Reg CF offerings must be conducted through registered funding portals or broker-dealers and are subject to ongoing reporting requirements.
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2. Regulation A+ (Reg A): Companies must file Form 1-A with the SEC, provide audited financial statements, and adhere to ongoing reporting requirements. Reg A offerings must be qualified by the SEC and may require state-level registration, depending on the tier and the states involved. Issuers that plan to raise capital throughout the US can greatly reduce their burden by engaging a registered broker-dealer.
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3. Regulation D (Reg D): Companies must file Form D with the SEC after the offering closes. Reg D is split into two subcategories:some text
   1. Reg D 506(b): Under 506(b), issuers can raise an unlimited amount of capital from an unlimited number of accredited investors and up to 35 non-accredited investors, provided they meet certain requirements. However, companies using this exemption cannot use general solicitation or advertising to market the securities.
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   2. Reg D 506(c): This exemption allows issuers to advertise their raise to a broader audience. However, all investors in a 506(c) offering must be accredited—and the issuer must take reasonable steps to verify their accreditation status. 

In addition to these federal regulations, businesses raising capital digitally must also comply with state securities laws, also known as "blue sky laws." These laws vary by state and may require additional filings, disclosures, or registrations.
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To navigate this complex regulatory landscape, it's essential to work with experienced legal professionals who specialize in securities law. They can help you determine the most suitable offering type for your business, guide you through the filing process, and ensure ongoing compliance with all applicable regulations.
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DealMaker's platform is designed with compliance in mind. With built-in compliance features, such as KYC/AML checks, investor accreditation verification, and registered broker-dealer services, DealMaker streamlines the compliance process, giving you peace of mind and allowing you to focus on your raise.

How to Market Your Capital Raise

Marketing is the key to attracting investors and driving interest in your online capital-raising campaign. A well-executed marketing strategy can significantly increase your visibility, expand your reach, and ultimately help you achieve your funding goals.
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Here are some effective marketing strategies for online capital-raising:

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• Website: Your website is your brand’s identity online, so make sure it's well-designed, informative, and easy to navigate. Include a clear call to action that directs visitors to your offering page, like an “Invest Now” button in the eyebrow or header. Follow SEO best practices to increase organic traffic and improve your online visibility.
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• Offering Page: This is the one place where you can share every detail of your offering—so make it count. Highlight your company's story, team, products/services, and growth plans. Make an impact with a beautifully-produced pitch video. Take the extra time to design custom graphics, integrate your branding, and share your vision. The better your offering page, the greater your conversion rate.
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• Social Media: Leverage social media platforms like LinkedIn, Twitter, Facebook, and Instagram to share updates about your campaign, engage with potential investors, and build a community of supporters. Use relevant hashtags and run targeted ads to reach a wider audience.
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• Email Marketing: Build an email list of prospects, followers, and investors. Keep them informed about your campaign through regular newsletters, updates, and announcements. Personalize your emails and segment your audience based on their behavior, acquisition channel, or position in the funnel. Use compelling subject lines, engaging content, and clear calls to action to encourage recipients to visit your offering page and invest.
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• Public Relations: Positive media attention can significantly boost your credibility and attract new investors. Secure media coverage for your campaign through press releases, media pitches, and interviews. Identify journalists and publications that cover your industry or have written about similar offerings and reach out to them with a compelling story angle.
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• Influencer Marketing: Consider partnering with influencers, bloggers, or industry experts in your industry or niche to promote your offering to their followers. Be selective. Make sure they have a large, engaged, and real community that aligns closely with your target audience. The right match can help you reach new potential investors and lend credibility to your campaign.
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• Investor Events: Host virtual or in-person events to showcase your offering and engage with potential investors. These events can include webinars, Q&A sessions, happy hours, and more. Use these opportunities to present your company, answer questions, and most importantly, ask questions. Building 1:1 relationships is one of the most powerful ways to convert leads into shareholders.
• Paid Advertising: Invest in paid advertising on platforms like Google, Facebook, and LinkedIn to reach a targeted audience of potential investors. Use compelling ad copy and visuals to grab attention and drive traffic to your offering page. Monitor your ad performance and adjust your targeting and messaging as needed to optimize your results.

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DealMaker Reach offers an all-in-one suite of powerful marketing tools and services to help you maximize your campaign's success. From website design and development to investor nurturing and paid advertising, our team of marketing experts will work with you to create a comprehensive strategy tailored to your business and raise goals. With Reach, you can focus on running your business while we take care of attracting investors and driving interest in your offering.

Conclusion

Online capital-raising has revolutionized the way businesses access funding, opening up new opportunities for growth and success. By leveraging the power of the internet and tapping into a global investor pool, founders and operators can secure the financial resources they need to bring their vision to life.
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But as with anything new, navigating the world of online capital-raising can be complex and challenging. From choosing the right offering type and platform to building a strong investor community and complying with regulations, there are many key elements to keep track of

That's where DealMaker comes in. As the leading online capital-raising platform, we offer a comprehensive suite of tools and services designed to simplify and streamline the entire capital-raising process. Our team of legal experts, marketing specialists, and customer support professionals are dedicated to helping you achieve your funding goals and unlock your business's full potential.
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Whether you run a startup seeking seed funding or an established enterprise looking to fuel its next phase of growth, DealMaker can be your trusted partner in online capital-raising. With our cutting-edge technology, robust compliance framework, and unparalleled expertise, we'll guide you through every step of the process, from planning your offering to engaging with investors and beyond.
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So if you're ready to take your business to the next level and tap into the power of community capital, look no further than DealMaker. Join the founders and operators who have already raised over $2B through our platform, and experience the difference that a trusted partner can make.

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