Crowdfundingchangeshowpeoplegetmoneyforprojects.Manypeoplehaveideas.Theyneedmoneytostart.Banksmaynotgiveloans.Friendsandfamilymaynothaveenough.Crowdfundingusestheinternet.Itconnectsideaownerswithmanyregularpeople.Eachpersongivesasmallamountofmoney.Together,theyfundtheproject.

Equitycrowdfundingisaspecialtype.Itisnotaboutdonations.Itisnotaboutpre-buyingaproduct.Inequitycrowdfunding,peoplegivemoneytoabusiness.Inreturn,theygetasmallpieceofthatbusiness.Theybecomepartialowners.Theyownashare.Thisshareiscalledequity.Ifthebusinessdoeswell,thevalueofthesharemaygoup.Ifthebusinessmakesaprofit,shareholdersmightgetapartofthatprofit.Thisisapotentialreturnontheirinvestment.

Thismethodispowerful.Itopensdoorsforsmallbusinesses.Abakerywantstoopenasecondlocation.Atechpersoncreatesanewapp.Afarmerwantstobuynewequipment.Theyallneedcapital.Traditionalinvestingisforwealthypeople.Itisforventurecapitalists.Equitycrowdfundingisdifferent.Itisforeveryone.Ateachercaninvest.Anursecaninvest.Astudentcaninvest.Theycaninvestwithasmallamountofmoney,likeonehundreddollars.

Theprocesshappensonline.Specialwebsiteshosttheseopportunities.Theseplatformsarelikemarketplaces.Businessownerscreateapage.Theyexplaintheirbusiness.Theyshowtheirplan.Theytalkabouttheirteam.Theystatehowmuchmoneytheyneed.Theysaywhatpercentageofthecompanytheyareoffering.Peoplevisitthewebsite.Theybrowsedifferentbusinesses.Theyreadthestories.Theydecidewheretoputtheirmoney.

Thissystemhasmanybenefits.Forthebusiness,itismorethanmoney.Itcreatesacommunityofsupporters.Theseinvestorsbelieveintheidea.Theymightbecomeloyalcustomers.Theymighttelltheirfriends.Fortheinvestor,itisachancetobepartofsomethingnew.Theycansupportideastheycareabout.Theycanhelpalocalbusinessgrow.Theyhavethepotentialtomakefinancialgains.

Therearealsoclearrisks.Mostnewbusinessesfail.Thisisafact.Investinginearly-stagecompaniesisveryrisky.Peoplecanlosealltheirmoney.Thebusinessmightnotgrow.Itmightclose.Theinvestmentisnotlikemoneyinabank.Itisnotguaranteed.Itisoftenilliquid.Thismeansyoucannotgetyourmoneybackquickly.Youmighthavetowaityears.Youmightonlygetyourmoneybackifthecompanyissoldormakesabigprofit.

Rulesexisttoprotectpeople.Governmentsmaketheserules.Therulesaredifferentineachcountry.Theylimithowmuchapersoncaninvestbasedontheirwealthorincome.Theyrequirebusinessestoshareimportantinformation.Theymakesuretheplatformsfollowthelaw.Thegoalistopreventfraud.Thegoalistomakesurepeopleunderstandtherisk.

Equitycrowdfundingaffectstheeconomy.Itspreadsoutinvestment.Moneycangotomanydifferentplaces.Itisnotjustinbigcities.Asmalltownbusinesscanfindinvestorsfromacrossthecountry.Itsupportsinnovation.Itallowspeopletovotewiththeirdollarsforthefuturetheywanttosee.Itcancreatejobs.Afundedbusinesscanhiremoreworkers.

Thehumansideisimportant.Peopleinvestinstories.Theyinvestinpeople.Afamily-runrestaurantwantingtopreservearecipe.Acompanymakingeco-friendlyproducts.Adevelopercreatingahelpfulsoftware.Theconnectionispersonal.Theinvestorfeelsinvolved.Theycheckthecompany'supdates.Theyrootforitssuccess.

Criticspointoutproblems.Somebusinessesontheseplatformsarenotgoodinvestments.Somepromisesaretoooptimistic.Theinformationcanbehardtounderstandforaregularperson.Theexcitementcanmakepeopleforgettherisk.Theymightinvestbasedonemotion,notcarefulthought.

Thefutureofequitycrowdfundingisstillforming.Technologyimproves.Morepeoplegetusedtotheidea.Lawsmightchange.Itcouldbecomeanormalwayforsmallbusinessestoraisemoney.Itcouldbecomeanormalpartofhowpeoplemanagetheirmoney,puttingasmallamountintoseveralbusinessestheybelievein.

Thismodelshowsashiftinpower.Itchallengesoldfinancialsystems.Itsaysthatfundingideasshouldnotonlybeforthewealthyfew.Itusestheinternet'spowertoconnectandgatherresources.Itisasimpleidea.Manypeoplegivealittle.Together,theycanbuildsomething.Theysharetherisk.Theyhopetosharethereward.Itiscapitalismwithacrowd.Itisdirect.Itismessy.Itisfullofhopeandpossibility.Itisalsofullofcautionandpotentialloss.Itisanewtool.Peoplearestilllearninghowtouseitwell.