Is crowdfunding the new venture capitalism or even better?
ONCE upon a time, entrepreneurs had one primary course of action if they wanted to realise an idea. First step: go door-to-door looking for financial backers - and face a good share of rejection along the way. Step two: spend a fair amount of seed capital on the expense of prototyping. Going to customers was the last step of the process. And because products were taken to market without knowing exactly how consumers were going to respond, more funds would need to go towards marketing to build awareness.
Crowdfunding is an industrial revolution in that it flips the Venture Capitalist (VC) fundraising model on its head. Sites like Kickstarter (US), Seedr (UK), and KissKissBankBank (France), let entrepreneurs go directly to their potential clients early on in the development phase - and find funding and market validation in one fell swoop.
This is great news for the dreamers - fundraising for a startup is now easier than ever. However, the crowdfunding model still has some major hurdles in its path.
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