What it is: Crowdfunding is about persuading individuals to each give you a small donation -- $10, $50, $100, maybe more. Once you get thousands of donors, you have some serious cash on hand.
This has all become possible in recent years thanks to a proliferation of websites that allow nonprofits, artists, musicians -- and yes, businesses -- to raise money. This is the social media version of fundraising.
There are more than 600 crowdfunding platforms around the world, with fundraising reaching billions of dollars annually, according to the research firm Massolution.
How it works: The most common type of crowdfunding fundraising is using sites like Kickstarter and Indiegogo variety, where donations are sought in return for special rewards. That
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The firm said angel investments should grow to between $28 billion and $50 billion by 2015. That's an 88% increase in lending venues around the world. There is a definite void left by traditional vendors, as small business loans from banks have dropped 32% since 2008. This is an opportunity for the crowdfunding market, and TABB research said that if the SEC gets it right, crowdfunding will have a real chance to compete as an alternative …show more content…
The JOBS Act Titles II and III should be passed by third quarter of this year. These regulations would allow people to invest through registered brokers or lending portals, but there will be limitations on how much money could be invested.
6. Crowdfunding brings more diversity to business
Crowdfunding gives more women and minorities opportunities to see their business ideas succeed. Investors in all industries have become risk-averse. They often rely on networking and precedent to decide who wins in the business world, and that usually leaves women and minorities hanging. According the Center for Venture Research, in 2012, only 16% of startups pitching to angels were women-led and only 6% were minority-led. Of the 16%, only 25% actually secure funding.
About 42% of Indiegogo's successful campaigns are run by women. The site also promoted International Women's Day very heavily, and co-founder Danae Ringelmann is trying to make sure women's success in business one of her biggest platforms. Abroad, female entrepreneurs who would never get the chance to promote their business are now being given the opportunity through micro lending and crowdfunding