One of the questions we get most often from BOI/CIWBC clients is "What is the best way to fund my idea?" This is the age old question that has been the challenge of all entrepreneurs since time immemorial. There are many options: traditional bank funding, microloans, angel investors, venture capital, and "bootstrapping" your business through slow growth without debt. In addition, crowdfunding has become an increasingly popular way to get the money you need to take your business to the next level.
The Jumpstart Our Business Startups Act (JOBS Act) was signed into law in 2012 and changed the rules regarding crowdfunding. Crowdfunding is defined as "the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet." Before the law was passed, investors had a long list of rules and regulations that they needed to adhere to in order to protect them from bad investments. The JOBS Act loosened those regulations so that anyone can invest in the small business or idea that they believe in.
This recently published story from PBS NewsHour answers a lot of questions about crowdfunding.
In addition, this blog post from Patrick McGinnis of the Huffington Post asks the important question "Will the JOBS Act Actually Create Any Jobs?" by outlining some of the potential risks of crowdfunding.
What this means to you, the entrepreneur, is this: Do ALL your homework. Look at all your options and explore your funding needs from all angles. The old adage "if something is too good to be true, it probably is" tends to hit home more often than not. You may be able to get started with less money than you anticipated. Always seek the advice of someone who is not emotionally or financially invested in your business - like one of BOI's Business Coaches - to help you make these life/business altering decisions.