Crowdfund Investing For Dummies
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Crowdfund investing is an entirely new industry and an entirely new asset class for investors to evaluate. It represents the beginning of Web 3.0, where the social web (or Web 2.0) combines with businesses raising capital.

It creates a new way for businesses to get seed funding or growth capital, and it will generate an entirely new ecosystem of businesses, business models, processes, and strategies that can be used in starting or growing a business. Just like the ecosystem that was formed around the social web, the formation of an ecosystem of businesses to support and enhance this new, highly innovative industry.

Anticipate new forms of capital creation and financial instruments

Creativity and opportunity generate the possibility for new strategies, tactics, and services to begin. It’ll be fascinating to watch as this new way to raise capital creates new business models and ways of thinking.

As society continues its move toward deeper customization of experience, more digital connections will occur, making in-person connections less regular. People will create more experiences, value, and relationships online. These sociological changes will affect how businesses grow and succeed.

As nations, investors, and business owners become accustomed to these types of relationships and transactions, more governments will allow cross-border capital flows via crowdfund investing. The regulatory frameworks will need to be revised to allow this, but over time, governments will see the benefits and will be able to put reasonable safeguards in place to protect business owners, investors, and communities.

Redefine community

When people discuss crowdfund investing in terms of “community-based financing,” you must understand that “community” is not just related to the geography of where you live and work. The web has made it far easier than ever before to create communities online. These communities could be communities of origin, communities of interest, or communities of diaspora.

The web can now connect these communities in ways that enable them to support businesses and ideas in convenient and engaged ways. This should be a great benefit for all types of communities. These communities also can assist in crowd vigilance to provide additional security and protection to reduce and eliminate fraud wherever possible.

Build communities and businesses based on the power of crowds

This is the beginning of a new chapter in the history of corporate America. Many individuals feel disconnected and disappointed in large corporations. They want to find ways to shop and invest locally, ways to support their own communities and interests.

A few companies that were unable to get the attention of traditional venture capital and angel investors have been able to find crowds to invest in them. In some cases, these same companies have gone on to receive investment from angel or venture capital investors because the company had already received the support of the crowd and proved there were customers for their services.

About This Article

This article is from the book:

About the book authors:

Sherwood Neiss, Jason W. Best, and Zak Cassady-Dorion are the founders of Startup Exemption (developers of the crowdfund investing framework used in the 2012 JOBS Act). They deeply understand the process, rules, disclosures, and risks of capital formation from both the entrepreneur's and the investor's points of view.

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