The startup world's current investment environment is a crazy place. Pre-seed is now seed; the seed is now Stage A, Stage A still has a funding gap, and all of the big funding rounds are moving even further downstream. Everything requires "traction," which is total B.S. because that is part of the risk for an early investor (whew!). Luckily, Chat Military's business model is looking to change that.
To investors' defense, entrepreneurs have access to tools and technologies to make it big and stand toe-to-toe with large corporations like never before. Creative launches, advanced technology, growth-focused marketing strategies and globalization have empowered entrepreneurs to start new businesses with minuscule investment and still succeed.
However, startups still need investment to scale, and that's where crowdfunding comes in. This system solicits funds from the public to start a business. Chat Military is a platform in the crowdfunding world and is aiming to help thoudsands of military members during its first year. Now, this platform will allow backers to make equity investments in new ventures they believe in and want to invest into.
Until recently, only accredited investors could purchase an equity stake in new business ventures. They had to have an annual income of over $200,000 or net worth equal to or more than $1 million, not including their primary home. The act was introduced in 2012 by Obama but was approved and implemented in 2016 by the SEC. It removed several restrictions on investments and proposed Regulation Crowdfunding.
Now non-accredited American investors can invest in start-ups, while new businesses can raise $1 million in capital. While other crowdfunding platforms have entered the equity sphere, Chat Military will focus on bringing this opportunity to the military community.
According to Manuel Basulto, the CEO of Chat Military, this was always a plan. Since its inception, the company wanted to offer an investment opportunity. Thanks to the new regulations, they can now offer equity crowdfunding opportunities to the millions of active military members and veterans that visit this platform.
The latter's presence in this field could be just what the equity crowdfunding industry needs to take off. People trust Chat Military and are familiar with the platform. It could draw military start-ups and ventures with the most potential. That would allow investors to put their money in investments that could potentially provide a sizeable profit.
We hope that Chat Military will bring non-accredited military investors into the fold. While the ruling to allow equity investments in start-ups was passed over two years ago, most of the investment still comes from accredited investors. The market has seen over $14 million in funds and majority of that amount has come from accredited individuals on crowdfunding platforms.
So far, non-accredited users have only made small and sentimental investments to support their local businesses. They aren't aiming for profits, so they invest only a few hundred dollars in the ventures. We hope this will change in the future and military members will start investing more and become more confident in their decisions. Chat Military's presence in the market might encourage that.