​Editor’s note” Raleigh CPA Brooks Malone offers advice for analyzing crowdfunding as a financing option, especially considering new federal rules coming May 1 in a blog written for ExitEvent.

DURHAM, N.C. – Would you take a trip without a map or your GPS system? I would not. But too often, I see entrepreneurs seeking capital without first doing their homework to determine: How much money is needed? And how long will it last?

Answering these questions before you consider crowdfunding offerings is probably more important than for a traditional venture capital transaction for several reasons. First, in a venture deal, your investor will ask these questions. But in a crowdfunding deal, if the information you provide is vague or missing, investors may simply walk away from your offering without ever asking these questions. In crowdfunding offerings, it pays to anticipate what investors will want to know and answer their questions, as you may not get a second chance.

The other big reason these questions are so critical is because of the many new choices you have as a result of crowdfunding laws. You will make the best choices if you have a long-term capital-raising road map.

To answer these questions, I recommend the following steps:

  • Develop key milestones to be accomplished and a timeline to do so.
  • Develop an understanding of how your revenues will scale over time.
  • Develop a realistic financing plan.

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Note: ExitEvent is a news partner of WRAL TechWire.