Crowdfunding to see Explosive Growth (Press Release June 4th)
No less an authority than Forbes says crowdfunding is going to be a major source of small business investment capital very soon.
The growth is not going to be limited to the United States. The European business community is also looking to crowdfunding as a major source of capital according to media reports. Last year the crowdfunding website Kickstarter.com had pulled in $100 million from small-amount investors.
“This is not surprising at all,” said Howard Orloff, president and founder of www.
Crowdfunding-Website-Reviews.com . “By the first week of May, more than $1 billion was raised by various crowdfunding websites. That is serious money, right now. That is the kind of money that buys big corporations. That’s not very soon. That’s right now. But that $1 billion is only the tip of an iceberg of money waiting to be tapped.”
Mr. Orloff’s firm tracks, compares and reports on crowdfunding websites.
Reference: Crowdfunding Growth forecast from Crowwdfunding Website Reviews
MORE WEBSITES COMING
“Right now there are a few major Internet websites in this market and a handful of smaller operators. This is about to change. Thanks to the JOBS Act, crowdfunding is about to be one of the financial industry’s 800-pound gorilla,” Mr. Orloff said. “But just like crowdfunding getting money from thousands of people, the crowdfunding world is going to made of hundreds, likely thousands of websites.”
There is money to be made in crowdfunding, both by small-amount investors and by the websites that manage crowdfunding accounts, he said. That is why the growth is going to be so rapid, he added.
Jumpstart Our Business Startups Act (JOBS) is a federal government initiative. The act makes it much easier for small investors to get involved in supplying capital to small and medium businesses.
This new law focused even more attention on crowdfunding. Where the media spotlight shines, the world watches, Mr. Orloff said. This is especially true of the financial world, he added.
“As the market expands, people will start looking to support what they believe in. Take an investor with $100 and a passion for fishing. He’s going to look for a crowdfunding website that invests in companies that make fishing gear,” Mr. Orloff said. “That’s just an example. It can be anything people support. We will see crowdfunding websites with a razor-sharp focus, investing money in very specific areas. The market for this is as large as the number of people who want to invest.”
MAKING FUNDING EASIER
The recession has made getting money for a new business venture difficult. In some instances it is nearly impossible.
Crowdfunding is filling a need for capital that traditional financial institutions are not willing to consider, Mr. Orloff said. Because traditional lenders say no, some businesses fail – the last thing that is needed when a major shift in the economy is necessary.
“Crowdfunding is willing to take risks a bank won’t,” he said. “Because of that, crowdfunding is going to be an enormous economic driver. The impact this kind of investing will have in just a few years is going to rival traditional Wall Street financing.”
Crowdfunding is when many, many investors take an interest in a business and invest a small amount.
“Crowdfunding is asking a crowd of people to contribute money for a specific cause, business or a project. The rewards vary. It can be a financial return or a share in the project,” Mr. Orloff said.
In other words, the business gets money and revenue from thousands of investors. Repayment terms are spelled out ahead of time. It can be a real win/win situation for investors and businesses alike,” Mr. Orloff said.
crowdfunding-website-reviews.com reported a solar operations company in California raised $2.5 million through crowdfunding for itself.
“This money did not come from a central source: a bank, investment company, or other associated capital service,” Mr. Orloff said. “The funding came from a variety of people and businesses. Some had a vested interest in solar power, some just saw a chance to make money.”
He said this is just another example of how the intense recession is driving the viability of crowdfunding.
“It will not surprise me at all to see crowdfunding raising as much as $1 billion for a single project within the next few years. People are ready to put their money to work and they will do it when they see an opportunity,” he said.
CROWDFUNDING FOR NON PROFITS
Non-profit organizations and groups benefit from crowdfunding. Niche crowdfunding sites, like those limited to areas such as non-profits, abound.
If money is needed to increase the size of a homeless shelter, hire a PR firm to set up a charity golf tournament, or design a depot for donated cars, crowdfunding is there.
“This is the altruistic side of crowdfunding,” Mr. Orloff said. “It’s not about making a profit. It’s about making a difference.”
He pointed to the Haiti earthquake a few years ago. The Red Cross raised more than $5 million for relief efforts through text messaging.
“It wasn’t called crowdfunding at that time, but that is crowdfunding any way you look at it. Each text message sent $10 to the Red Cross. Sure, some people sent more than one message, but most sent one text. That’s $10 per person and they raised more than $5 million,” Mr. Orloff said. “Crowdfunding absolutely works for nonprofits.”
Mr. Orloff’s site also keeps an eye on these websites. He said contributors deserve to know where their money is going and how it is being spent.
There are crowd-funding sources and websites available for you to select from and decide what fit is best for you and your non-profit agency or organization.