By now, many of us have taken part in a crowdfunding campaign. For those who aren’t familiar with it, it’s a simple concept entrepreneurs have tapped into for big money: opening up funding of a project to the public, typically online, and typically amplified through social media channels.
There are many websites that enable crowdfunding; two of the most well-known are Kickstarter and Indiegogo. The campaigns vary greatly, running the gamut from an individual’s medical bills to the production of the Veronica Mars movie. My experience has had a similar range, beginning with contributing to a tractor for a family member’s new farm, to recently contributing toward #ReWriteTheCode to fund a documentary exploring the intersection of race and gender in tech.
Now, there is a new kind of crowdfunding that you need to know about: equity crowdfunding. New government regulation stemming from the 2012 JOBS Act allows members of the general public to invest in privately held companies. This regulation went into effect in June 2015.
Prior to this, to buy private stock, an individual would either need to buy under special conditions (such as having a relationship with the entrepreneur selling shares), or would need a net worth of more than $1 million (excluding their home), a two-year income of more than $200,000, or control over more than $5 million in assets. Now, there is a lower entry barrier for anyone who wants to make an investment and therefore own a small piece of a startup.
In light of this, we need to start paying more attention to crowdfunding because it is fundamentally disrupting innovation. If you want to see certain types of products or companies succeed, then you need to be involved in crowdfunding startups so that your voice is heard. An unattainable barrier to entry is no longer present.
As Geri Stengel describes in her report Stand Out in the Crowd: How Women (and Men) Benefit From Equity Crowdfunding, women are a natural fit for crowdfunding. Women make the majority of consumer decisions across the spectrum, and therefore have valuable insights into products and markets. Additionally, women control over 40 percent of the investable funds available. It is no surprise, then, that many startups are looking to attract female investors.
Stengel interviewed me for her report, and we talked a lot about the new era for investing, which is much more transparent and inclusive. Getting information on startups has never been easier. It has also never been easier to invest in the change you want to see in the world.
For more information on crowdfunding, download the free report by Stengel here. Even if you aren’t sure that crowdfunding is for you, you can learn a lot about innovation and investing by reading the report and following the discussions.
Barbara Clarke is a member of the DailyWorth Connect Program. Read more about the program here. She is also an angel investor in DailyWorth. You can find a full list of Clarke's angel investments here.
This article is not investment advice, nor is it a solicitation to buy or sell any shares.