Crowdfunding sites are becoming a popular source of venture capital. The idea is to use social media and other online marketing tools to attract financing for your business. Sites like Indiegogo, Somolend and the well known Kickstarter have already helped small businesses gain access to millions of dollars.
Currently, Crowdfunding sites are used for donations or rewards only, which are great ways to support a cause or become involved in something that uniquely interests you. The Jumpstart Our Business Startups Act (JOBS Act) has further opened the door to allow for investors to seek a financial return with Debt-Based Crowdfunding, where a lender receives payments with interest.
The New Law will allow for businesses to sell securities to online investors mid this year, after the Securities and Exchange Commission (SEC) has finalized Crowdfunding requirements. Some requirements for Debt-Based Crowdfunding will include audited financial statements and detailed analysis of financials. It is anticipated that venture capitalist will eventually want to see success in Crowdfunding sites as a measure of ROI before they come aboard. Funds can be raised up to as little as $5,000, upward over a million. In 2011, over $835 million were raised in the U.S. alone and $1.4 billion worldwide. To learn more about Crowdfunding visit sites like crowdsourcing.org and dailycrowdsource.com.
Opus Consulting Group offers corporate renewal helping our clients regardless of industry or sector. We offer services in Strategic Planning, Exit Strategy Planning, Executive Management and Turnaround Management. Contact us, if you have an interest in how Crowdfunding can help your business.