In the field of investing, the funding process of crowdfunding entails the financing of business ventures from a large pool of investors. Each individual contributes small amounts of capital towards a seed idea. The concept of social media facilitates interactions between potential investors and entrepreneurs. Instead of the traditional and exclusive set of venture capitalists, casual investors can provide moderate amounts of capital to high growth potential funds. However, the regulatory Securities and Exchange Commission (SEC) has instituted measures that ensure inexperienced investors do not risk their savings in ventures that can lose the entire principal. The attractive option of crowdfunding provides an alternative to investing in publicly traded companies listed on a stock exchange.
The opportunity to raise capital from a wide array of sources is supported by large platforms. In particular, the Kickstarter site has provided a setting for more than a combined pledge of four billion dollars for all the projects. In an equity-based approach, the startup company can raise money by offering small portions of proprietorship. The crowdfunding system to pitch an idea is met with eager investors willing to back a promising idea. Furthermore, it fosters the development of creative organizations that have the opportunity to develop into lucrative mature companies.
Obra D. Tompkins High School, TX