More and more start-ups and entrepreneurs are turning to crowd-funding for the finances to get their projects off the ground, with the crowdfunding economy estimated to be worth a whopping $5.1 billion in 2013 (all projects), up from $1.5 billion in 2011, according to Clarity.fm, a company that connects knowledge seekers with experts.
Many people will have heard of the likes of Kickstarter, Indiegogo, and Crowdtilt, but these are just the tip of a larger iceberg. Indiegogo and Crowdtilt allow for any project to be proposed for funding, while others target niche segments. Kickstarter, for example, is only for creative projects, while Petridish.org and Microryza are for scientific research, and DonorsChoose for education crowdfunding for school supplies.
The likes of Indiegogo and Crowdtilt are for non-accredited investors, meaning that John or Jane Doe on the street can put their money (up to a limit of $2,000 for people with less than $100,000 in income) into a project.
SmartyPants – a true success story
On the flip side are platforms such as CircleUp, which brings qualified investors together online where they can hear companies tell their stories and can also view backing documents via a secure server. SmartyPants, which specializes in delivering vitamin formulas via a gummy delivery system, has been with CircleUp since the start and is very happy with its performance.