by Jason Best and Woody Neiss
According to the Kauffman Foundation, the largest foundation dedicated to
promoting entrepreneurship, approximately 565,000 businesses were started in
2010, with 31 percent of new businesses begun with less than $5,000 in capital.
The foundation further reports that the average capital required for a small
business is $80,000, with 10 percent of startups forgoing outside financing
altogether.
In our
soon-to-be-released white paper, we calculate the market for new business
financing from external capital sources at approximately $40 billion dollars
annually. Given these figures and assuming a five-year adoption timeline for
crowdfunding, as was the case for e-commerce, we estimate that five percent of
business ventures will seek financing in the Crowdfund investment marketplace
by 2017. We also project that new businesses will demand $4.3 billion in funding
in year one and $59.6 billion by year five from the Crowdfund investment
marketplace.
Crowdfunding will
be one of the most transparent, efficient and necessary investment channels in
the future. Each company funded will create jobs. Therefore, funding more
companies translates to a greater number of jobs created. Customers become
investors and have a vested interest in the success of a company and become
brand evangelists. This is only now possible because crowdfunding democratizes
access to capital, something we can all celebrate. View the full important text
