Crowdfunding: The Hyper-Democratization of Business Creation

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Today it is not possible to talk about entrepreneurship without talking about crowdfunding. Entrepreneurs have the ability to efficiently tap more financial resources than ever before thanks to crowdfunding platforms like Kickstarter and Indiegogo. By reaching out to the masses and asking each participant to provide a small contribution, entrepreneurs can achieve their capital raising goals like never before.

Before crowdfunding became the ubiquitous start-up funding mechanism that it is today most entrepreneurs were limited to reaching out to their friends and family when it came to raising money for a new venture or to grow an existing business. Thanks to the Internet, social media and the power and influence of the crowd, funding is more accessible to more people than at any time in the history of civilization. Welcome to the age of hyper-democratization of business creation.

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When we hear the term crowdfunding we think about the Internet sensations that enabled needy but worthwhile causes to raise money in small amounts from numerous sources. These crowdfunding platforms are referred to as innovative, flexible and democratic and are viewed by many as a modern-day miracle made possible only as a result of the Internet and social media.

Supporting this notion and topping the list of the most successful crowdfunding projectsever is the Space Combat video game. The Space Combat campaign raised over $83 million from 898,000 supporters. Runner-up is the Pebble Time smart watch campaign which raised over $20 million. Admittedly, without the Internet and social media these crowdfunding feats would likely not have been achieved.

The reality, however, is that crowdfunding has been in existence for centuries and has likely existed going back to the earliest days of man. Crowdfunding raises have been referred to as cundinas in Mexico as far back as anyone we know can remember. And in nearly every corner of the planet there has historically been a form of crowdfunding used in times of need.

Imagine the farmer in the early days who was in need of tools to prepare his land for the planting of corn. Short on capital he spoke to members of the community, stating that without their support the town would go without corn – an essential staple. Through word-of-mouth and some hustling, the farmer raised the monies needed to purchase the tools needed to prepare the land and ensure corn for the coming season. Did the farmer raise $83 million? Not likely. But he collected what was needed and the community benefitted from its contribution.

Today’s crowdfunding efforts are no different. An entrepreneur in need of funding to launch a new company, product or service uses word-of-mouth via the Internet and social media. And like the farmer, the entrepreneur hustles to make sure that the message gets out loud, clear and into the ears of the right people. Ultimately, as will be described later in this book, a crowdfunding campaign succeeds if it results in benefit to the participants.

During a recent crowdfunding workshop we held in Los Angeles an attendee raised the point that the only difference is that the farmer had to work a lot harder to get the money. I promptly laughed and noted that crowdfunding has never been harder. Crowdfunding is far from a sure thing. And contrary to popular belief, crowdfunding can be a bitch.

While the amount of crowdfunded dollars continues to grow, the number of start-ups and existing businesses seeking the crowd’s monies is growing at a faster rate. As a result the competition for dollars is intense and requires that entrepreneurs know exactly what they are doing before embarking on a crowdfunding expedition.

Two Men in Your Business Guide to Crowdfunding provides entrepreneurs with the roadmap needed to plan and execute a successful crowdfunding raise. This book shows entrepreneurs how to prepare for the raise, how to structure the raise, how to get the word out, how to keep the pressure on, how to use tools that work and what to do once the crowdfunding campaign is over.

Each chapter in this book addresses a different topic. The chapters do not need to be read in order – though we recommend it. Also, this book is concise and to the point. The goal is to provide the needed information in a manner that allows the entrepreneur to get to crowdfunding as quickly as possible.

We are confident that this book will provide amazing value. In exchange, we ask that you use the power of the Internet and social media to spread the word. Happy crowdfunding!

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