Now that crowdfunding has gone mainstream it could become the source of funding to define the decade. Crowdfunding could further blow the playing field wide open if equity crowdfunding gets the green light from the SEC.
At the moment, only accredited investors are allowed to invest in young companies. The Securities and Exchange Commission is working to establish rules that would allow anybody to invest in startups via online platforms.
If Equity Crowdfunding does become reality, it will open up another gateway for young or fledgling companies to raise capital and funding by allowing non-accredited investors–people who make less than $200,000 and are worth than less $1 million–to make investments in these startups.
In fact, a wave of small business and startup financing is expected to sweep the nation. The Fung Institute for Engineering Leadership at the UC Berkeley College of Engineering, recently concluded its study on the evolving crowdfunding market. Sources there say, “We have presented a set of data, assumptions, and estimations that may prove useful. From the lenses of Angels, VCs and Small Business lending we believe a market as large as $3.98B per year could rapidly evolve.â€
It’s important though to remember that raising money this way is no picnic. If you haven’t raised about 30% of your money in the first two to three days, the odds are pretty good you won’t be successful.
But with a potential cash pool of nearly $4 billion up for grabs, choosing the right site is critical for success. And with about 1000 sites to pick from it’s about to get a lot more brutal out there.
Here are six Crowdfunding sites you’re better off knowing if you want to fund your new business.
Kickstarter The most popular of all the crowdfunding sites. It’s been around for some time and still hasn’t lost its luster. Fundraisers still take it seriously.
According to CNBC, “In the five years since its been around, crowdfunders raised more than $1.1 billion for 61,230 projects as of May 8–with 63 securing $1 million or more.”
The site lets entrepreneurs use rewards-based crowdfunding, where supporters of a project pledge money in exchange for a small gift. It opted out of letting crowdfunders sell equity to accredited investors, which an SEC decision enabled last fall.