February 21, 2020
Crowdfunding is becoming a widely favored alternative to raising capital through loans from banks. Crowdfunding is a way for businesses or other organizations to raise money in the form of either donations or investments from multiple individuals. This new form of capital formation emerged in an organized way in the wake of the 2008 financial crisis largely because of the difficulties faced by artisans, entrepreneurs, and early-stage enterprises in raising funds. With traditional banks less willing to lend, entrepreneurs started to look elsewhere for capital.
Importance of Crowdfunding for Commoners
Up until recently, venture capitalists or angels seemed like the chosen ones. VC funding has long been the traditional norm for companies looking for funding. They had the privilege to gain from the upside of their investments in new companies. However, commoners didn’t have the ability to invest and buy shares in early-stage companies. Imagine that you keep $1000 to $5000 aside every year so that you can invest in stock markets directly or through other instruments to pick a small stake in a listed company. On the other hand, you have been recently tracking these five startups, and a couple of teams impressed you a lot. Now, you think that two of these five startups have grea ...