Crowdfunding has been described as a new way to expose and raise money from a large number of people. What type of new funding opportunities might crowdfunding offer for companies that seek capital for growth? Companies will be able to seek equity, debt, donation, and reward-based capital via many crowdfunding platforms that focus on differing capital types and industries.
Should crowdfunding be considered a new paradigm for raising capital to support innovation and business growth, or is it primarily an additional “platform” that links companies with investors and sources of capital? Crowdfunding will improve the most limiting factor in modern capitalism – the capitalization of young businesses – and could unleash innovation and job creation as never before. Crowdfunding is expected to increase the number of potential investors from 2 million to over 50 million and raise the amount of potentially available capital from $1 trillion to over $5 trillion.
By now, many people might be familiar with the story of Pebble Technology which raised more than $10 million this past May on an online crowdfunding platform, Kickstarter, to fund the development and production of its smart phone watch the Pebble. How indicative was this as an example of the potential of crowdfunding as way to expose new products to an engaged audience early in the product development stage and to prove actual market demand? Many crowdfunding platforms are going well beyond just offering capital to include a multitude of valuable resources and knowledge enabled by the participating “crowd.” So, the collective wisdom of the crowd can offer feedback on new products or even serve as early adopters.
Besides hardware innovation, what other types of product development projects might attract capital through crowdfunding? Crowdfunding can be used to fund just about any project or business. Capital for film projects, startup businesses, alternative energy infrastructure, and even micro loans for a cell phone in Africa are occurring through crowdfunding platforms.
Will crowdfunding change how companies develop their business plans? If so, in what way? Since crowdfunding entails large numbers of funding opportunities and “crowdfunders,” some level of business plan standardization is essential for crowdfunders to review many opportunities in a reasonable amount of time. Our EquityNet platform is unique in that it combines business plan standardization, patented analytics, and business benchmarking to achieve a very efficient experience for crowdfunders and hence, higher funding success rate for entrepreneurs.
Does crowdfunding have the potential to deliver capital, mentoring, and resources to virtually anywhere in the U.S? Yes, anywhere that an Internet connection exists has the potential to benefit from crowdfunding.
What type of opportunities exist for dynamic and innovative companies seeking to develop new product lines separate from their existing legacy products and services? Companies can use crowdfunding platforms to both gauge market reaction to their new product and at the same time obtain funding for that product.
Any advice for a company that is ready to develop a new product wants to know what the next steps might be to explore crowdfunding as a funding option? Yes, visit and explore your funding options at leading crowdfunding platforms such as www.equitynet.com, www.kickstarter.com, and www.indiegogo.com
Judd Hollas is founder and CEO of EquityNet, the original and only patented equity crowdfunding platform. It is used by thousands of entrepreneurs, investors, government entities, business incubators, and other members of the entrepreneurial community to plan, analyze, and capitalize privately-held businesses. EquityNet features over 12,000 individual investors who have already provided $104 million in equity capital to entrepreneurs across North America.