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What does Equity Crowdfunding Mean for your Local Economy?

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What does Equity Crowdfunding Mean for your Local Economy?

By Startup Valley (375 words)
Posted in Crowdfunding on October 24, 2014

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The idea of crowdfunding is funding a project or venture by raising many small amounts of money from a large number of people.  But, have you heard of equity crowdfunding yet? This kind of funding helps both the startup company as well as the investors, by giving them shares in the company profits. Equity crowdfunding is a way for anyone to become an investor in a company, no matter what your income! With this type of crowdfunding, even if you only have a few hundred dollars to invest, you can still become a shareholder in a startup company that you are interested in helping. It is an alternative way to finance a business and also gives supporters the chance to become investors and shareholders.

We have all heard of Yahoo, Google, Facebook, Amazon, and Starbucks, right? These are companies that started because of people willing to invest in their ideas. But, did these investors get to become shareholders, and reap the rewards with the entrepreneurs themselves? Not really. That is basically what equity crowdfunding is: having financial help from others to start up their businesses, and giving them a small share in the company. This gives possible entrepreneurs more options for raising capital while giving the investors equity ownership. This alternative to rewards-based crowdfunding can generate new ideas, additional jobs, and improved organizations that will improve the local economy. Businesses in the oil and gas, real estate, technology, art and entertainment, agriculture, food, and hospitality industries can also benefit from these investments with more business in their local areas.  

Investing in startup companies in your local community can bring more employment to the neighborhood as well as the income it generates. With more businesses in the vicinity, this brings more traffic, which means more income to other local companies. This can also bring in revenue to other companies such as convenience stores, hotels, grocery stores, real estate companies, filling stations, and department stores.

The idea is fascinating: people put together small amounts of money to become equity shareholders in the beginning stages of startup companies, when the prospects (and risks) are the highest. Experts have estimated that equity crowdfunding will have 100% growth this year, with $400 million raised. The payback from equity crowdfunding can be enormous. 

 

 

 

 

 

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