Is it true that crowdfunding is dead because people started asking for vacations, plastic surgery and leather seats for their cars? That it’s now tainted because part of it became a way for someone to get something they couldn’t afford by asking strangers on the internet for cash?
Crowdfunding was conceived as a way to jumpstart new ideas and humanitarian causes, but has now become interspersed with panhandlers and jokesters.
But we’re not done with crowdfunding yet. It just needed to evolve in a different way, where people aren’t simply pre-purchasing goods and funding pranks (like helping a guy make his first potato salad). What could happen if we used crowdfunding for creation instead of consumption?
In fact, the “crowd” has been funding creation for a long time. For instance, millions of Americans – the “crowd” – put their money into American businesses and the American government by investing in stocks and bonds to fund new business and government projects and create new jobs. That’s “crowdfunding”.
In the same vein, the new iteration of public investing is investment crowdfunding. Investment crowdfunding allows the American people to invest in in private companies instead of public ones.
You might wonder: Why open up a new kind of investment for the general public?
First, this type of investing in private businesses wasn’t available to you previously unless you were wealthy and personally knew the right people who were offering these investment opportunities. So opening up these investments democratizes access to investment opportunities for everyone.
Second, your investments can matter a great deal to private businesses like your favorite restaurant or fitness studio, not just in financial terms.
Traditionally, small businesses would need to bootstrap, get a bank loan or sell a chunk of their business to people with deep pockets. They’d make payments to a bank or alternative lender or their rich angel investors – benefiting a select few.
But with the general public as the investors, businesses would make payments to people that frequent their business, keeping the money flowing in the local economy. As customers and investors, the public is potentially more engaged in the business. The businesses can tell their investor community what they’re using the money for and how they’re helping the city by hiring locally and providing services to the community.
By investing in small businesses you can help foster new ideas. Investment crowdfunding is a way for people to invest in small private companies to support innovation, entrepreneurship, creativity and the freedom to go after our dreams.
Small businesses in the non-virtual world are more critical than ever as so much of our lives move online. Maybe “crowdfunding”, as it was, didn’t die but simply evolved – and investment crowdfunding is the next level.
Disclaimer: This blog article is provided for general informational purposes only. This blog post is not a solicitation of an offer to buy or an offer to sell any security nor should it be construed as investment advice or recommendation by NextSeed. Blog posts does not take into account the investment objectives, financial situation or needs of any particular investor. In making any investment decision, investors should rely on their own examination of each issuer and the terms of each offering, including the merits and risks involved.