How Crowdfunding Fills Gaps Created by the Venture Capital Industry
by David Brown,
co-founder and director of operations at Smart Money Entrepreneurs
2013 presents more than an opportunity for small
businesses and investors. In 2012, we saw the exponential growth of
crowdfunding investments around the world. Never before have entrepreneurs been
able to raise such a significant amount of capital to jumpstart their
businesses.
People want to invest in entrepreneurs – why stop
them? Individual investors are realizing the power of
directly investing in startups that have a plan and a vision. That is why the
global crowdfunding industry experienced a 91 percent growth in investments
from 2011 to 2012. Industry analysts estimate that the industry will grow from
$2.8 billion to at least $6 billion in 2013. That is
$6 billion for innovation and job creation. 55 percent of that growth will take
place within the U.S.
Venture capital firms, also known as VCs, have created
gaps in the startup industry that venture crowdfunding can now fill. Those gaps
are inefficient use of startup time, lack of startups being funded, lack of
diversification in the industry, and lack of transparency in startup
investments – an important issue that’s rarely mentioned.
Inefficient Use of Startup Time
Early stage startups need to spend more time building
their startup, and less time searching for seed capital from a venture capital
firm. Over the last 50 years, VCs have done a great job at selling their value added services, and now
startups almost immediately seek VC funding when looking to grow. Unless
soliciting advisement, any time spent not building a startup past the seed
stage could arguably invite a lower return on invested time. Read more
Copyright: Crowdsourcing.org
