Crowdfunding

Everyday investors can finally buy shares in private startups, but so far "crowdfunding" is off to a slow start. After new US investment rules came into effect this week that allow anyone to invest in private companies, only around three dozen startups - including a distillery and a donut store - were peddling stakes to the public on nine funding websites by Wednesday morning, according to news site Crowdfund Insider.

Meanwhile, a virtual company created using a computer code could raise $200 million when it ends its fund-raising campaign next week. The company is called DAO, which stands for Decentralized Autonomous Organization. It is run on the Ethereum network, a public blockchain which uses the ether currency to execute peer-to-peer contracts automatically without the need for intermediaries. DAO has no chief executive, no employees, and no set corporate mission. Yet it raised 10.86 million in the ether currency, equivalent to about $131 million, reports Reuters.

After new investment rules came into effect this week that allow anyone to invest in private companies, only around three dozen startups - including a distillery and a donut store - were peddling stakes to the public on nine funding websites by Wednesday morning, according to news site Crowdfund Insider. Crowdfunding is the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.

Traditionally, you’d spend months sifting through your personal network, vetting potential investors, and spending your own time and money to get in front of them. With crowdfunding, it’s much easier for you to get your opportunity in front of more interested parties and give them more ways to help grow your business, from investing thousands in exchange for equity to contributing $20 in exchange for a first-run product or other reward.

The 3 primary types are donation-based, rewards-based, and equity crowdfunding. Rewards-based crowdfunding involves individuals contributing to your business in exchange for a “reward,” typically a form of the product or service your company offers. Even though this method offers backers a reward, it’s still generally considered a subset of donation-based crowdfunding since there is no financial or equity return, according to www.fundable.com, the largest business crowdfunding platform dedicated exclusively to helping companies raise capital..