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    • Home
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      • Recent Posts

        • 4 Easy Steps to Improve Startup Funding Efficiency

          4 Easy Steps to Improve Startup Funding Efficiency

        • 14 Types of Information Investors May Request as Part Of Their Due Diligence Checklist for Your Startup [Infographic]

          14 Types of Information Investors May Request as Part Of Their Due Diligence Checklist for Your Startup [Infographic]

        • 8 Things the Founders Must Know for their Pitch to an Angel Group

          8 Things the Founders Must Know for their Pitch to an Angel Group

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          Which Accelerator Should My Startup Apply to Attend?

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          Where Should You Incorporate Your Startup? Delaware!

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          Startup Investor Spotlight: Boise Angel Alliance (BAA)

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Tagged: JOBS Act

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Fund, How to Get Funding

Crowdfunding – The Fastest Growing and Most Unusual Source of Startup Funding

America’s first major crowdfunding project was the Statue of Liberty.

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Funding
This term is used synonymously with the words “financing” and “capital.” It refers to the amount of money that is needed for a business endeavor. For example, a new business owner may seek a certain amount of funding for their startup company. This “raised” capital can be used to launch their endeavor as well as to sustain their company until monetary profit can be generated.4
Startup
A startup is a new business venture / enterprise in its initial or early stages of development. These stages include the concept, seed, early, growth and mezzanine stages.6
Crowdfunding
“Crowdfunding” is the process of raising financial support for a venture via smaller amounts from many investors (“the crowd”), rather than the alternative pattern of larger amounts from a smaller number of supporters.  Charities and philanthropies have traditionally employed both fundraising strategies (soliciting both the general populace, or crowd, as well as fewer wealthier donors), while businesses have usually taken the route involving fewer and larger supporters.  Today’s internet has vastly increased the ability of fundraisers to communicate information, solicit and receive financial support from anyone on-line. Crowdfunding without the expectation of financial return, or with the promise of a specific good or service, are termed “donation-based” or “reward-based” crowdfunding, are in the nature of charitable solicitation or business marketing, and have never been illegal in the U.S.  In contrast, soliciting funds in return for a ownership interest or expectation of repayment, are termed “equity-based” or “debt-based” crowdfunding (together grouped as “securities-based” crowdfunding), and have been until now governed (and effectively prevented) by federal and state securities law.  One of the most significant parts (Title III) of the federal “Jumpstart Our Business Startups”, or JOBS Act of 2012 specifically enabled and legalized “security-based crowdfunding”, subject to a variety of regulations and restrictions.1
Related Terms

Crowdfunding Intermediary Regulatory Advocates | Portal | Issuer

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