Crowdfunding is a way to cut out the middleman and to deliver money right to those who create the product. JOBS Act officially opened up a new source of funding for small companies and startups. Much of the attention so far has been on this component of the bill because it would allow financing via crowdfunding. Participants can raise as much as $1 million a year without having to do a public offering — a step requiring state-by-state registrations that can cost thousands of dollars
How well does crowdfunding actually work? Fundraising website Kickstarter is giving a picture of some of its own numbers, including statistics on success rates and dollars pledged.
The New York company, through which customers raise money to fund creative projects, has received pledges of $261 million so far, according to data published on the company’s site.
Only successfully funded projects — those that reach their pledge goals by their deadlines — collect money; for those that fall short, the pledges are canceled. So far, 60,786 projects have launched on Kickstarter. Of the projects that have reached their deadlines, 44% have been successfully funded, the site said. While not a necessity, the hallmark of crowd funding is the use of micro-transactions, where a person contributes a small amount to a cause.
The small donations can make a big pile by the end.
The crowd-funding facilitator usually holds the money until a certain money target or date requirement has been met.
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