Congress just passed the JOBS Act and I can almost hear all the start ups and entrepreneurs in the world cheer in unisons. For those of you who are now just beginning to follow the trend of crowdfunding, read on. It’s a social media trend you’re going to want to know about as it continues to pick up steam in the social sphere.
In the past decade the Internet in general, and more specifically social media, has served to shrink the world. Geographical, language and cultural barriers that once seemed impassable are now conquered with the tap of a button on a keyboard, as global classrooms put Portuguese and Japanese students in the same virtual room and an African warlord’s crimes become an international scandal overnight.
In the days before the Internet, new ideas in the marketplace were often tested using focus groups -- an assortment of people in a room testing a product and giving feedback to make that offering more appealing to the masses. But today’s technology, which allows international collaboration and instant response to ideas, has birthed crowdfunding, a financial model to raise capital for business ventures by everyday people that provides grassroots funding to an initiative and thereby instant feedback – trumping focus groups because it allows people to put their own money behind an initiative. Thus it gives everyday investors instant ownership and allows the healthy expansion of the marketplace of ideas.
It's no secret that the economy isn't what it used to be, but a bill introduced in the US House of Representatives last fall by Rep. Patrick McHenry (NC-10), which was passed overwhelmingly, might hold the key to a major jump start for budding entrepreneurs who are currently hampered by SEC rules and other regulatory burdens.