Pros And Cons Of Crowdfunding

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Within the last decade there has been a major change in business and the traditional way to fund a project or venture. Boundaries are being shattered across sectors, and as boundaries recede new opportunities emerge. Connective technologies and innovations has resulted in an interconnected global economy. The influencers behind innovations are shifting form, from the traditional investment bank to the more accessible crowd. Customers become active participants, and together with the companies they uncover new ideas and solve business problems.

From this revolution in the investment landscape, new ventures emerge with the ambition to reach for customers and investors on a global level. Since new firms seldom have a stable cash flow to ensure regular interest payments, they cannot access either equity or debt finance. Therefore, a creative solution to generate capital to fund a project has emerged in the shape of the young phenomenon crowdfunding. Crowdfunding is a method of raising capital for ventures and start-ups, by collecting relatively small amounts from a large public. This method primarily takes place online through social media and different crowdfunding platforms. Currently, the crowdfunding’s …show more content…

The business world is adapting to the new reality of an interconnected global economy by strengthening the regulatory environment for crowdfunding. If we turn our attention to the United States where recent changes in legalization of investment has been completed. The “Jumpstart Our Business Startups (JOBS)” Act, signed 2012 by President Obama, is expected to push forward the development of crowdfunding platforms. The act has benefited non-accredited investors and allowed issuing companies to state the plans they have for raising funds (Drake, 2015). We could therefore anticipate further acceleration of the great changes already

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