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Crowdfunding - An Alternative to Bank Loans and Investments

Updated on January 11, 2018
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Kortney has been a clinical Physician Assistant for 13 yrs. when not being a PA, Kortney’s hobbies include writing, research, and investing.

An emerging trend

President Obama recently signed the Jobs Act, a bipartisan bill with the goal to make it easier for startup companies, entrepreneurs and inventors to get funds from online investors. This bill was created/enacted in 2012 and has contributed to economic growth and business development since that time. Business owners and entrepreneurs are now able to use a broker to leverage financial assistance for an endeavor from multiple individuals or small groups of individuals rather than from a single investor, such as a bank, angel investor, or financial institute. This allows for a greater acquisition of funding in many cases, which allows businesses to grow more rapidly.


Alternatively, an individual who is looking to invest money can choose to invest small amounts of money through a broker to fund new businesses of their choice. In many cases, the investment is much smaller than typical stock market investments, as funding comes from multiple sources and business owners don’t need to obtain large sums from each individual investor.


This type of transaction/trade is referred to as Crowdfunding or Crowdsourcing. Several crowdsourcing websites/brokers are already available to support various causes, including the arts, film, photography, music, media, mobile apps, technology, etc.


This is a unique opportunity for the average person to find investors who are willing to support their project financially. Business capital/funding is more accessible using this method in some cases, especially for new, very small businesses, inventors, and middle class individuals. This sense of financial accessibility has promoted new business development, which ultimately positively influences economic growth as a whole in the US. What was once just a dream for some people can now be a reality. With the signing of the new bill and with the emerging trend of crowdsourcing websites, many will be able to turn their dream into a Real profitable business or product. Currently, there are several websites that offer these services already. Websites include: Kickstarter.com, MicroVentures.com, Quirky.com, RocketHub.com, and Pozible.com, just to name a few.

As it stands now, there are different incentives for investors to invest in a business. Some sites offer prizes in exchange for the investment while others guarantee a return on the investment. At Kickstarter.com you can invest in just about any field, but it is important to read through the full report, as some projects provide imvestors with the first of the products being made while others agree to list the names of investors in their publications and others guarantee a trip to see their production facility or venue.

Generating revenue from investments

Other websites offer different incentives, tokens of appreciation for your financial backing. With the passing of the Jobs Act, however, there are more lucrative reasons for investors to get involved. In the years after enactment of the bill, many more crowdfunding websites have been created and this field continues to emerge.

Although many people are looking for the "get rich quick" option or the option to quit their day job and work for themselves, Crowdsourcing/Crowdfunding is unlikely to accomplish those objectives at this time. However, savvy investments in businesses offering monetary return or a percentage of the business could prove be lucrative in some cases.


For now, the best advice is to do your research. Understand your options. There is already a lot of information available and it is beneficial to get into this form of investment early. The time is now, and the opportunity is great! A great place to start is crowdsourcing.org.


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© 2012 kortneypac

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