By Usman Ahmed
Equity crowdfunding is a relatively new concept that is quickly getting
popularity because of its contribution towards economic growth. crowdfunding in
itself is not a new concept. It always existed in one form or another. It is
since last year it gained a legal form in USA, UK and other parts of the world.
Crowdfunding
for Entrepreneurs
The major contribution equity crowdfunding is making is creating jobs and
promoting entrepreneurship which is an activity that is always encouraged as it
contributes significantly in economic growth and competition. Entrepreneurs add to economic efficiency by
expanding existing markets and exploring new markets. In USA, 9% people are
involved in entrepreneurial activity and are providing jobs. Similarly,
start-ups are creating 3 million jobs annually.
The biggest challenge entrepreneurs face to work on their ideas or
projects is financing. Lack of capital is a big hurdle in the way of
entrepreneurial activity. Although there exists traditional or conventional
financing methods, but they come with hard set of rules. Moreover,
entrepreneurs face tough time in getting loan approval because of high level of
risk involved in new ventures. In 2012, out of six million start-ups, only
1,174 succeeded in getting venture capital.
How it
benefits entrepreneurs?
With crowdfunding, start-ups and entrepreneurs can involve like-minded
people and get their support in funding their ideas and projects. This is
mutually beneficial both for entrepreneurs and investors. Entrepreneurs get
access to funds and investors get company shares in return of their investment.
Moreover, it also provides a cost effective method of marketing ideas and
building a supporting community. In comparison with traditional financing,
equity crowdfunding offers limited liability and give investors confidence to
invest in high risk high return opportunities.
According to Kauffman, investment by angel investors is quickly growing.
In 2012 only, angel investors have invested in about fifty to sixty thousand
deals. The angel investors have to qualify as accredited investor for
crowdfunding. Currently, angel investors represent only 1% of the US
population. The number is continually rising since president Obama has signed
the JOBS “Jumpstart Our Business Startups” Act on April 5, 2012.
trucrowd.com
The JOBS Act supported crowdfunding by removing restrictions on private
investments for startups. Since the JOBS Act is signed, Crowdfunding portals
like trucrowd.com are
striving to develop the best funding platform while waiting for final
regulations by SEC and FINRA which are expected to release by summer 2014.
Besides trucrowd.com, there are
many other emerging crowdfunding portals that are attracting online investors.
Kindly mention in the comment section below if you want us to investigate any
particular crowdfunding platform.
We would like to mention here some more details about trucrowd.com which as per our investigation is an
intelligent funding portal. For the time being, trucrowd.com is in its beta
stage. You can participate free of charge in testing its beta version by
registering with your email ID. This is an amazing opportunity for
entrepreneurs and investors to test this amazing future funding method.
Conclusion
Equity crowdfunding is paving new paths for entrepreneurs and small
businesses by raising millions of dollars. It is contributing significantly
towards better entrepreneurship, economy and society.
Do you know any other crowdfunding portal that offers registration free
of cost? We welcome your comments.
