If you still don't know what equity crowdfunding is, today we want to give you an answer to the most common questions about this form of investment: how does it work? What does it mean to become a partner of a company? Can it be earned?
We are Alessandro and Carlo Pedersoli Jr, founders of Bud Power, a company that operates in the healthy food and supplements market. Our goal is to become one of the leading companies for the development of personal physical well-being, protecting the environment and animals, through the creation of healthy and tasty Made in Italy products. All trying to bring a smile just like in the films of our grandfather Bud Spencer.
This is the challenge that we at Bud Power have undertaken about 2 years ago, and for this reason today we have launched an equity crowdfunding campaign that will give each of you the opportunity to become an investor of the company, even with a small contribution.
But how exactly does equity crowdfunding work? Is it really to be trusted? What does it mean to become a member of an SME (small and medium-sized enterprise)? What are the earning opportunities? Let's try to answer these questions and clarify any doubts!
1. What is equity crowdfunding?
Equity Crowdfunding is a form of online investment that allows private and professional investors to invest starting from small amounts in startups and SMEs with high growth potential by becoming partners. In Italy this activity is only possible through portals authorized by Consob. We at Bud Power have decided to rely on the BacktoWork platform.
2. How does equity crowdfunding work?
The mechanism is quite simple and transparent. The company publicly explains who it is and what it plans to do in the near future, asking the public to support its development plan. Those who make their contributions do so because they believe the project is solid and want to obtain a potential financial return. By allocating a certain amount of money, he then enters the capital (equity, in fact) of the company, becoming a partner. In practice, it is as if he had bought a piece of that company.
To raise capital with this system, you must register on a specific authorized platform (such as BacktoWork, chosen by Bud Power). It is also necessary to be part of some very specific categories: small and medium-sized enterprises, innovative startups, innovative SMEs, etc.
3. Why invest in startups and SMEs?
With a view to portfolio diversification, investing a small portion of your assets in startups and SMEs with high growth potential can help increase their profitability. The high risk of this type of investment is in fact balanced by potentially interesting returns, as well as a subsidized tax regime.
4. Can it be trusted and is it safe to invest? Is there a law?
Absolutely yes. Indeed, Italy was among the first European countries to adopt organic legislation on crowdfunding, subjecting it to supervision by Consob (National Commission for Society and the Stock Exchange). There is also an ad hoc regulation, which has since been updated several times. In addition, for each company that launches a campaign on the platform, a document kit is made available to the investor, complete with all the elements necessary to deepen the opportunity: pitch deck, business plan, prospectus, financial statements, patents, etc.
5. How can I participate? What is the minimum amount that can be invested?
The BacktoWork platform is very intuitive. Just sign up for free to be able to read the various projects, with all the supporting documents, and decide calmly. Once you have entered the amount you want to invest, the system converts it into a certain number of shares. At that point, you enter your data, fill in an appropriateness questionnaire compliant with the law, and confirm. An email will give instructions to complete the payment by bank transfer or credit card.
As for the minimum amount that can be invested, each equity crowdfunding campaign has its own rules; for that of Bud Power, the investment starts from a minimum of 500 euros.
Here you can find the video procedure on how to actually invest on the BacktoWork platform.
1. distribution of profits (in case the company is an SME)
6. What does those who participate in Bud Power's crowdfunding receive in return?
Those who participate in crowdfunding become a full partner of the company; if it makes available a share exceeding 25 thousand euros, it also guarantees the right to vote in the shareholders' meeting. Almost all companies provide for a system of this type, because an assembly with thousands of small investors would become unmanageable. To learn more about this topic, we refer you to an in-depth article on the BacktoWork blog.
7. What will the return on my investment be?
When investing in the venture capital of startups and SMEs, the return on investment can be generated by:
2. the listing of the company on a regulated market, at a value greater than that in which it was invested, with the subsequent sale of the shares held by the investor
3. the acquisition of part or all of the shares / shares in the company by a third party investor at a value greater than that in which it was invested
Since the investment is aimed at subscribing the risk capital of a company, there is, however, no guarantee on the return of the operation. The amount of invested capital can therefore be lost in whole or in part depending on the future performance of the company, whose capital is subscribed.
8. Are there any costs and taxes to pay?
The BacktoWork platform does not require the payment of any fees by investors participating in an Equity Crowdfunding campaign.
While, like all other investments in the share capital of companies, even those made through crowdfunding platforms are subject to the normal taxation for capital gains. Just contact your accountant, who will give all the necessary advice and insert them in the tax return.
Thanks to the so-called "relaunch decree", individuals can deduct 50% of the amount they invested in the share capital of a company from the income tax, but only if the latter is a startup or innovative SME (as in the case of Bud Power).
To learn more about this, we refer you to the article on BacktoWork tax deductions.
We leave you to the launch video of our campaign.
Alessandro Pedersoli & Carlo Pedersoli Jr
Co-Founders at Bud Power