Crowdfunding…
With the current climate of lending being less liberal
having more stringent criteria it is nearly impossible to finance your
business, project, or idea without depleting your personal savings. The U.S. economy has been hit with such huge
impacts in the primary and secondary market that lending institutions are less
likely to fund dreams or buy into ideas that show no profit potential. Crowdfunding has the latest tool in
fundraising innovation that can help raise capital to fund your project or
business. Currently the American
securities laws will not allow for contributors to secure a return on projects
funded by crowd funding but this concept is largely accepted in the U.K. and
Australia according to Business Lawyer, Mark Mohler.
Full Sail University Program Director, Ron Cook, shares his
thoughts on crowdfunding and its affect on the entertainment business. Cook explains that this is a way of expanding
your family network of financial contributors that are connected with your
purpose and dream and is not considered a loan but a donation of purpose. The power of this tool has immediate
benefits. Your mission is funded, all
donations are acknowledged, and each giver now has personally attached to your
mission as a result of the tier level descriptions for each gift.
Donation and rewards based funding is largely accepted and
gaining momentum across the country among several platforms. Indigogo,
Kickstarter, and RocketHub that are high grossing crowdfunding platforms with
variances in commission, disbursement criteria and published releases. Approximately 43% of projects are funded
according to Kickstarter and half were less than $10,000. John Nash, course director at Full Sail
University, mentions success in crowdfunding happens when you consider what’s
important to the funder. He states that
the “crowd” in crowdfunding is the most important component of this practice. Each giver that connects to your mission is
now connected to the execution of your project through shared ideas and best
practices highlighted in a compelling story.
As the use of crowdfunding becomes more widespread among
entrepreneurs and within our economy it is possible that more laws will be created to protect the
investor and subject to federal regulations. The more we move away from the
conventional practices of lending without credit, collateral, and record of
success it is possible that contributors will begin to consider the limitations
in donating funds without the benefits of being an investor. Governing authorities may insert practices to
ensure that raising capital independently of lending institutions may have
adverse affects for the project owner, but for now crowdfunding is clearly a
depository for donations among contributors with shared goals and likeness of
mind.
