Many entrepreneurs are now turning to crowd funding as a way to help grow their small business, according to Triplepundit.com’s Dale Wannen.
He says that crowd funding, or crowd financing, uses the internet to help find funding. An entrepreneur looking to start a corporation is able to seek multiple smaller pledges of money instead of one large investment from an angel investor or venture capitalist to help get their business idea off the ground. In return, they get get a cut of the returns.
Entrepreneurs say in addition to helping them get the money they need to expand, seeing the number of investors impressed with their product gives them real feedback as to how productive their idea may be.
"If you put money down to support a design, that’s a strong indicator of actual demand," Cameesa founder Andrew Cronk, a programmer in Chicago, told Time magazine.
VentureBeat blogger Kevin Lawton says that crowd funding will soon become the norm, and become more popular than traditional venture capital investments. He says as the concept evolves, it will grow to include later stage investments as well as early seed funding.
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