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Crowd Funding: A New Way to Finance Your Startup

Dale Wannen
Dale Wannen | Thursday May 27th, 2010 | 8 Comments

Amidst the chaos of a global financial meltdown, it can be easy to overlook certain aspects of banking that are less urgent. VC funding seems to have flown under the radar as of late, however, it makes a big difference for entrepreneurs who are looking for funding to jumpstart their new businesses. Sadly, it’s now at its lowest point in 10 years. Even with 2010’s first quarter $4.71 billion wagered on venture opportunities, the outlook isn’t rosy.

Enter Crowd Funding. Crowd Funding or “crowd financing” basically uses the power of the Internet to fund startup organizations. An entrepreneur who is searching for funding could seek pledges of small amounts to support the growth of her venture. Whereas traditional venture financing is generally limited to wealthy or “accredited” investors (think Caddyshack country club members making deals on the golf course), crowdfunding allows the average person to partake in the potential growth of a startup and at the same time benefit a small business.

Though bootstrapping sounds like a groovy dance move, it can be one of the more difficult means of generating money for a venture.  But recently, certain companies are making entrepreneurs’ lives easier. The brilliant Jessica Jackley, cofounder of Kiva.org, is in the midst of starting Profounder.com, an online platform for entrepreneurs created to raise equity and debt financing via the internet. A recent venturebeat posting says that Jessica has the likes of Reid Hoffman, LinkedIn chairman, and Chris Larsen, CEO of Prosper, as advisors on this project so her team is not short of expertise in Web 2.0 and financing realm.

Other companies involved in crowdfunding have sprung up recently as well. One that seems to be setting the standard is kickstarter.com. On its website you will see an array of projects and the amount of funding it has raised to date. For example, you can finance a one acre rooftop farm in Brooklyn supplying fresh produce to local communities of New York City. How ’bout supporting an all-cartoon web based channel called Kaboing? Or supporting an organic snow cone business that already has 108 backers throwing in $2900?

With confidence in the markets slowly returning, the clean tech sector is seeing vast improvements in funding. In fact, the number of deals in cleantech were up 29% from last quarter and almost 85% from a year ago. Allowing small investors to partake in what otherwise have been limited to the ultra-wealthy would create a more fair playing ground in an otherwise unfair investment world


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  • Darnell Hawkins

    This guy knows what he is talking about. I really enjoy his point of view.

  • Dan

    Another crowdfunding innovator is IndieGoGo. If your interested in a successful ground-breaking crowdfunding platform you should definitely also check out IndieGoGo.com.

  • http://www.sponsume.com Greg

    For UK-based ventures, try Sponsume.com a new crowdfunding platform that's free to use at the moment…

  • http://www.sponsume.com Greg

    For UK-based ventures, try Sponsume.com a new crowdfunding platform that's free to use at the moment…

  • http://twitter.com/venturebonsai Venture Bonsai
  • Darren

    Crowdcube.com is about to launch in the UK providing crowdfunding in return for actual equity

  • http://www.funding4learning.com Pedro

    Funding4Learning is a new and revolutionary way for people around the world to fund their studies and educational campaigns.

    We provide a simple online platform where any student or researcher can raise money fast, with no hassles, and with a global reach by creating a fund-raising campaign.

    We believe in a world where everybody can have the same opportunities, where money should not be the main obstacle for getting top education, and where citizens around the world can pool their efforts to support talented people on their way to pursue their goals and dreams.

    For further information, please visit http://www.funding4learning.com or email us at: info@funding4learning.com

  • http://www.mymicroinvest.com Guillaume

    People, Profit and Planet, what a good philosophy for doing good business!

    That exactly what we believe in and why we decided to integrate the population (people) in the startup selection process, funding and promotion!

    We launched http://www.mymicroinvest.com an European Crowdsourcing and Crowdsourcing platform that helps early stage entrepreneurs with great business ideas to develop their project and achieve their goal.

    We provide a platform for entrepreneurs to connect their business ideas with supporters, potential partners and business angels networks to achieve their project.

    Here you have our video teaser: http://www.youtube.com/watch?v=tGbMPpE6IaE

    In a very short time we will be able to raise funds over the internet and become a Crowdfunding platform very soon!

    We would like to raise our Internet visibility and spread the word. You might have an interest in that platform and maybe you could drop a line about us on your website? http://www.mymicroinvest.com – That would be great!

    If you have questions, do not hesitate to ask me!