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Your Business: Crowdfunding – the new gold rush

Caution and due diligence are the hallmarks of wise investing. The same is true for taking on business partners. Waze traffic software Photo: Marc Israel Sellem Caution and due diligence are the hallmarks of wise investing. The same is true for taking on business partners. “Crowdfunding” is the new gold rush that raises cash by soliciting small amounts of money from many supporters and investors. It lets small-timers in early on start-up businesses, while entrepreneurs raise cash and gain strategic management alliances from equity investors. Crowdfunding is grammatically a noun, but it’s a verb to the entrepreneur. A company promotes its invention or cause on an Internet site (called a platform) and expects product orders or small donations to a cause, perhaps $10 or $25 each. Equity crowdfunding attracts many small investors with $10,000 or less. It pools money, something like a venture-capital fund, in exchange for part ownership of a company before it is bought out or “goes public.” Think WAZE. Cash is not just king; cash is power to design, produce and market the product. Sources for small-business cash flow are bank loans, which require collateral of a second house mortgage and title to the family car. Angel […]

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