Crowdfunding platforms such as gofundme and Kickstarter have made headway as vehicles allowing millions of people to realize their financial goals. Whether it’s paying for the surgery of a beloved pet, or raising capital to make the movie of your dreams, these instruments of fundraising have revolutionized the moneymaking process. It was only a matter of time before this type of platform was utilized for start-up businesses to connect with investors. But what is crowdfunding and who is it for? Here is a concise guide to help you understand this newest phenomenon.
How Does It Work?
Securities crowdfunding is a way for individuals to invest in different financial opportunities that were previously unavailable to them. Small businesses seeking funding, as well as organizations that are just getting started, put up a request for funding from a large pool of investors. Instead of seeking an angel investor or venture capitalist who donates a large sum, smaller sums are sought that would be the equivalent of what one shareholder would previously put up. Chances are offered via registered broker dealers, with the platforms acting solely as the conduit.
