![]() ![]() Securities and Exchange Commission (SEC) regulates it. Regulated crowdfunding is also an equity-based crowdfunding platform and it provides investors with a financial return, but the difference is the U.S. Donation-based or reward-based crowdfunding models like GoFundMe or Kickstarter do not provide a financial return.Īll equity-based crowdfunding platforms, which raise capital for startups and larger companies, are designed to provide investors with a financial return. It is a popular way to raise funds for a range of artistic, humanitarian, or social causes. Library of Congress Prints and Photographs Division.Ĭrowdfunding is a financing method that raises money by soliciting small individual investments or contributions from a large number of people. It will be interesting to see how language evolves in the coming years.Harris & Ewing, photographer. To describe raising money for your neighbor’s child suffering from cancer with the same term another might use to describe selling tokens for a startup using cryptocurrency is probably more confusing than helpful. We’ll see.Īs you can see, the word crowdfunding has many meanings-perhaps too many. It seems possible that start-up financing could migrate to a model where virtually all such transactions are transacted using the blockchain technology that underlies cryptocurrencies. The crypto community and equity crowdfunding communities overlapped and functioned in parallel for years, but increasingly the two communities are merging. Like SAFEs, some companies planning to sell tokens or coins in the future, use simple agreements for future tokens or SAFTs to raise money. ![]() The terms including initial token offering, token generating event, token sales and similar phrases. Initial coin offerings, ICOs, go by a variety of names, some aimed specifically at avoiding SEC regulation. ![]() The industry lacks clarity but increasingly, issuers are seeking to comply with securities laws when issuing new coins. The SEC has been working to establish rules defining when the sale of a coin or token should be regulated as the issuance of a security and when it may be exempt from such rules. While the name ICO evokes a parallel to IPO or initial public offering, the process more closely resembles equity crowdfunding than a traditional IPO. Overlapping with equity crowdfunding is the use of initial coin offerings or ICOs for cryptocurrencies. SAFEs are popular among issuers, but some legal experts question their value to investors. Credit: Devin Thorpeĭespite the label, which implies the sale of stock and other forms of equity investments, equity crowdfunding platforms can distribute a variety of securities, including debt and equity-like instruments called “SAFEs” or Simple Agreements for Future Equity. The first word you think of when you hear the word crowdfunding. Filmmakers and bands have used the site to fund production costs for their work, too. In a campaign that oozed with irony, Zach Danger Brown notoriously raised $55,492 to make potato salad. Smaller campaigns are more the norm on the site. Kickstarter is used by entrepreneurs and inventors to raise millions of dollars to fund development and production of devices like the Pebble Watch and the Coolest Cooler. Many people, myself included, discovered crowdfunding when Kickstarter began gaining traction. People often respond generously to such campaigns, seeming to prefer to give money directly to someone in need than to donate to an organization that would provide support to the same family.Ĭreatives of all types have been using Kickstarter, which has eschewed the word crowdfunding to describe what happens on the site, for more than a decade. This approach is often used effectively to deal with personal tragedy, whether a house burned down, a child has cancer or a parent has some other economic crisis. Individuals use “personal crowdfunding” on sites like GoFundMe and YouCaring-recently acquired by GoFundMe-to raise money to solve personal problems, either for themselves or for friends and family members. Nonprofits use sites like Classy, Razoo, Fundly, Crowdrise (now owned by GoFundMe) and FundRazr, that feature powerful peer-to-peer fundraising tools. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |