Start-up businesses often face challenges when attempting to secure funding from traditional sources, such as banks, venture capitalists or angel funds. Crowdfunding offers an increasingly popular alternative to these traditional financing options.
In fact, the iconic Statue of Liberty was one of the first major crowdfunded projects in the United States. In the summer of 1885, the readers of the New York World saw an unusual offering on the front page asking them to provide a small sum towards a “pedestal fund” to help finance the base of a new statue. “Let us not wait for the millionaires to give us money”, wrote the publisher Joseph Pulitzer. The campaign raised $101,091 from about 160,000 investors, many giving $1 or less.
Today, more and more people, from social entrepreneurs to innovative new business and technology start-ups, are turning online and to crowdfunding websites in order to gain financial backing and turn their dreams into success stories.
Ordinary people, from all over the world, are able to borrow money, invest in promising companies, raise funding for businesses or find charitable causes to donate to, all through crowdfunding websites. This removes the need for the traditional methods of funding and the financial obstacles which many individuals or start-ups can encounter.