With last week’s signing of the JOBS Act, startups will, for the first time, be able to raise capital from ordinary people through crowdfunding. Crowdfunding is the crowdsourcing of investment in growing companies. Crowdfunding expands the pool of capital available to startups by including unaccredited investors and pushes the whole process online so it doesn’t matter whether you are in San Francisco, California, or Sioux City, South Dakota. Crowdsourcing is used successfully to solve difficult scientific problems and to answer everyday questions . Taking the process of innovating and accessing information out of siloed government and corporate institutions, crowdsourcing provides solutions in an efficient way while simultaneously gathering valuable social proof from a large sample size. While often ineligible for regular bank loans because of lack of assets, startups in this country have a couple of options when seeking financing as they grow. SBA-backed lending and community development banks offer loans to small businesses; however, these loans can be 3.5% above market . For high-growth startups, equity financing makes more sense, but less than 3% of startups receive any financing . Less than 1% of Americans are angel investors. But, if Americans invested 1% of their total existing savings and investment capital in startups, there would be more capital available than all VCs and angel networks combined. The U.S. stands to gain from having more startups. According to the Kauffman Foundation and the National Bureau of Economic Research, new companies are the primary driver of job growth in this country . An NBER study on job creation found that new companies create three million new jobs a year while older companies lose one million jobs annually. As President Obama said last week when he signed the bill into law, “new businesses account for almost every new job that’s created in America.” So, let’s crowdsource job creation. Let’s crowdsource the financing of the companies creating jobs. This is the new meritocracy of financing—where anyone can compete and everyone stands to win. The U.S. is a nation of entrepreneurs, so let’s invest in each other. Posted by Melanie Plageman, Co-Founder of Motaavi
No comments :
Post a Comment