Lending Money

Have you ever borrowed money from your friends? That is peer-to-peer lending. At some point you pay your friends back to ensure they will lend you another day. Crowdfunding is different. Crowdfunding is a collective of individuals who pool their money. It is a crowd-sourced internet fundraising system, where you donate your money without obligation and you will probably never see a dime of it again. The entrepreneur could pay you back or offer some token in return, but the whole idea is to use your micro investment to successfully complete and implement the project you support. When you do not love money it is easier to invest profitable. If you do not need money you can decide to invest with a philanthropic mindset or even let your heart guide you. Everyone can spare 10 dollars and in crowdfunding it is the power of the masses that ensure the health of the project kickoff.

Crowdfunding The Evolution

Crowdfunding has evolved over the last decade, first in the film and music industries, later in journalism and charity. All to aggregate lots of small donations to fund their creative work. Today this new type of venture capital is generally accepted and you can really find projects trying to accomplish anything you can imagine. Someone really really famous once advised us to not bury our talents. Successful projects, usually require an anchor audience. Traditionally this would be a paying customer or an angel investor but with crowdfunding it is possible for complete strangers, friends or fans to engage the micropatronage, solely by enjoying the association with the project or to eventually receive a signed copy, credit online or a sponsored token.

Crowdfunding And Seed Capital

SMB‘s and start-ups has always needed funds to maximize their chances of success and obtaining money for a project has never been easy. The overall venture market has been shrinking since the last financial bubble and in the current environment banks nor angels will not lend to an entrepreneur. The chance of getting hold of some public or private equity is hard to nearly impossible. Large attractive business cases and complex specifications satisfy the bank and professional investors, but entrepreneurs often have very limited resources and maybe only little to no experience in creating the various documents in the proper quality to ensure funds are eventually obtained. The focused entrepreneur may not even dare to invest the time required and instead prioritize profitable or close to profitable opportunities. It is a most severe crisis when the pattern of investment change focus to lower-risk segments and increase allocation to existing portfolios. Where do the creative obtain those small bet seed-stage investments and who dare venture, risking health and personal relations, when the pipeline looks this grim? During my time as an inventor I have spent more than 1.600 hours writing applications to various competitions and growth pools in vain. That is half the time required to fire up a healthy beta ready tool for a new business venture. Go figure.

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