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The Business Beneficiaries of Crowdfund Investing

There are many business beneficiaries of crowdfund investing. The obvious beneficiaries are the businesses receiving the capital, but equity- and debt-based crowdfund investing has created a brand-new industry, and many people will make a lot of money from it.

The types of businesses most likely to benefit from crowdfund investing are startups, small businesses (including technology companies, bricks-and-mortar retail shops, and service companies), and anyone else who doesn’t easily qualify for traditional financing. The term used in the JOBS Act for such entities is emerging growth companies.

Launching and growing a successful business isn’t easy — and it never has been. Entrepreneurs and small business owners need the support of as many people as possible to be successful. Large, publicly traded companies have long had the support of many successful people; they have vast resources to pay experienced people to help guide them through the many complications of running a business.

Now, crowdfund investors can support growing companies and entrepreneurs in ways that before were not possible, with both financial support and expertise.

How does crowd expertise benefit a business? Crowdfund investing should be an active investment. If you buy stock in Apple or General Motors, all you give is your money. But when you engage in a crowdfund investing campaign, you can also support a company with your knowledge and skills.

For a business, the collective knowledge of the crowd is much greater than the knowledge of any group of experts. If you’re heading a startup company and you raise money from a venture capital group, you also get their knowledge support (from a small group of people).

In a crowdfunded company, your pool of investors may number 200, 300, or even higher. The collective knowledge of the crowd will be game changing for many small businesses. Of course, dealing with so much input may be overwhelming if you don’t handle it in an organized fashion.

Keep in mind that the biggest beneficiaries of crowdfund investing are the American people. With more businesses being launched, more jobs will be created. The more jobs that are created, the more capital will flow through the U.S. economy.

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