How Crowdfunding Could Reshape Real Estate Investing.
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I write about entrepreneurship, leadership, and financial technology.
Traditional Fundraising Model (Simplified)
Idea –> Pitch Banks or Investors –> Funding –> Execute Idea
Non-traditional Crowdfunding Model (Also Simplified)
Idea –> Set Up Crowdfunding Initiative –> Funding Goal Reached –> Funding –> Execute Idea
This “democratizing” of fundraising allows people outside the traditional investor groups and lenders to join in on the process. Kickstarter is still leading the way when it comes to creative consumer products with over $900 million pledged to over 125,000 unique projects. So far, crowdfunding has had the most success with tangible consumer products. For example, there might be an engineer who is building a more efficient bike seat and needs $10,000 to get it to market. He can post the project on a crowdfunding website and immediately have access to thousands (if not millions) of people and customers who would like to support bringing the project to market. Once the funding goal is reached, the money is transferred and the project can start.