Before the Internet increased the likelihood of connecting with customers and target audiences before launching a business, financing was a much more difficult stage for budding entrepreneurs. Today, crowdfunding is becoming a solution for many fledgling businesses, and according to an article in Financial Times, the funding secured through peer-to-peer sites can not only result in cheaper rates for entrepreneurs but also result in financial goals being met in record time.
Sites such as Seedrs in the UK and Lending Club in the US bridge together lenders and borrowers while facilitating early business equity investment. Founder of AOL, Steve Case, has shared his philosophy that crowdfunding can create “Silicon Valleys everywhere” by offering entrepreneurs n any location the same access to funding.
In fact, the amount lent by these peer-to-peer funding sites was almost $3 billion in 2013, up from around $100 million in 2007. Furthermore, the number of sites that an entrepreneur can seek funding on has grown from 1100 to 2700 in this last year.
Accessibility isn’t the only thing increasing funding for new businesses. Promotion has been on the side of entrepreneurship as well. Programs such as “Dragons’ Den” and “Shark Tank” have brought angel investment to the public eye and do wonders for demystifying entrepreneurship. The trend can cause the average citizen to reflect on his or her own business ideas and realize the possibilities of moving forward.
Unfortunately, not all countries are making it easy. While Canada, New Zealand, and France have all revised laws to facilitate online crowd funding, the US employs the most restrictions for business fundraising. Financial Times even asserts that the restrictions are more onerous than those for stock exchanges.
Even though regulators are merely trying to protect consumers from failures, the platforms continue to grow and become more prevalent in business startups. Certainly, in a short time, we’ll see more sites and more local business who would not have started had it not been for crowdfunding.