Raising Capital on the Internet
The internet has spawned a number of “outside the box” businesses, but one of the most powerful may be debt-based and equity-based crowdfund investing. Debt-based funding requires interest payments on debt and debt payback while equity shares provide ownership in the business. The first equity crowdfunding platform, Grow VC Group, was launched in 2009, and hundreds more have quickly followed.
Because of crowdfunding’s popularity and potential, the US Security and Exchange Commission’s Jumpstart Our Business Startups Act of 2012 was passed to monitor and regulate the activity. The act is intended to help small firms unable to raise startup funding through traditional channels such as banks, venture capital firms, or stock markets. The new funding system is also expanding the range of investors involved in equity crowdfunding.
Crowdfunding Isn’t Easy
As one might expect, the opportunity to raise money through crowdfunding has become wildly popular, but as in most other methods of raising capital, the majority of campaigns fail. It is up to those wishing to raise capital through crowdfunding to understand step-by-step how crowdfunding works because at least 60% of campaigns end in failure.
Another benefit of crowdfunding is the crowd assesses an idea, providing owners with immediate feedback on the potential for success. The Crowdfunding Bible walks you through setting up a campaign.
Crowdfunding for Non-Profits & Social Entrepreneurs
Crowdfunding is great for private business, but it’s also great for socially-oriented projects that typically have a harder time raising capital. Non-profits and social entrepreneurs numbering in the thousands have successfully raised money for projects that have the potential to change the world or do some immediate social good. A book, “Crowdfunding for Social Good,” is a good resource.
Crowdfunding for Writers, Inventors, Anyone
Several other groups including real estate agents, movie directors (see have written BOLD: How to Go Big, Create Wealth and Impact the World, which is a great guide.
Crowdfunding For Corporations
While crowdfunding was originally intended for individuals and small companies, it is increasingly becoming an option for medium and multinational companies.The world is in a time of unprecedented change and innovation with new technology including 3-D printing, artificial intelligence, robotics, networks, sensors, and synthetic biology being huge opportunities. “Crowdfunding: The Corporate Era” is a good resource.
Following is a TEDx talk on Crowdfunding 101: