Financing for Your Business or Nonprofit
Crowdfunding is growing in popularity in both the small business and nonprofit communities. But what exactly is crowdfunding and how does the process work?
For starters, here’s the definition from Investopedia.com:
The use of small amounts of capital from a large number of individuals to finance a new business venture. Crowdfunding makes use of the easy accessibility of vast networks of friends, family and colleagues through social media websites like Facebook, Twitter and LinkedIn to get the word out about a new business and attract investors. Crowdfunding has the potential to increase entrepreneurship by expanding the pool of investors from whom funds can be raised beyond the traditional circle of owners, relatives and venture capitalists.
There are 2 main models or types of crowdfunding:
The first is what’s called donation-based funding. The birth of crowdfunding has come through this model, where funders donate via a collaborative goal based process in return for products, perks or rewards.
The second and more recent model is investment crowdfunding, where businesses seeking capital sell ownership stakes online in the form of equity or debt. In this model, individuals who fund become owners or shareholders and have a potential for financial return, unlike in the donation model.
According to Forbes.com, The JOBS Act that was passed in April of 2012 paved the way to investment crowdfunding.
The Crowdfunding Industry Report by Massolution indicated that the crowdfunding industry raised $2.7 billion in 2012 alone!
So, how do SC state and local businesses and nonprofits learn more about possible resources?
One website to consider is the SC Small Business Chamber of Commerce's Crowdfunding portal, http://scsbc.org/sc-crowdfund/.
The site offers businesses and nonprofits access to capital through crowd funding from their immediate geographic communities. Launched in late 2013, the project is a partnership between the S.C. Small Business Chamber of Commerce, The American Sustainable Business Council and Mission Markets Inc., a New York-based securities firm.
According to Frank Knapp, President and CEO - SC Small Business Chamber of Commerce, “The difference with SC Small Business Chamber of Commerce crowdfunding portal is that it encourages communities to take control and support their own local economies more directly. We’re really serving a great need for small businesses and nonprofits that are trying to raise capital but cannot get it through traditional markets. This is an alternative for them.”
On Sunday, June 29 @ 3:00 p.m., 42 Business and Job Center customers visited the library and listened to Frank Knapp's presentation to learn more about this innovative way to secure business capital.
- SC Small Business Chamber of Commerce - Crowdfunding
Site serves as an online marketplace for small businesses, entrepreneurs and nonprofits seeking capital to solicit donations and investments for their business projects.
Access to fundraising campaigns a broad range of projects.
Invest for as little as $1,000 - 61,327 Investors, 10,646 Companies!
FuelPad and LaunchPad programs help campaign owners connect with potentail promotion and marketing partners.
Place for campaigns that focus on charitable causes and needs.
Site for lending for small businesses in the U.S., providing debt-based investment funding. The site's founder was a leading participants in the JOBS Act legislation.
Niche site for mobile app development.
Accredited investors and institutions have been responsible for funding a growing number of top tech start-ups.
Interested in creating your own crowdfunding community to support donation-based fundraising for a specific group or market? Check out this site!
Site focuses on bringing an invention or product to life, with community participation.
Looking for funding for a creative project and need donation-based funding? Begin your search with Kickstarter!