The Real (and Very High) Cost of Crowdfunding


BY ERIK SHERMAN, Crowdfunding is all the rage. You know, OK’d by Congress, a chance to raise money online from regular folks, a chance for entrepreneurs to obtain capital without the whole “let’s go public” mania. A child of the JOBS Act of 2012, it was meant as a way to help smaller companies get the resources they needed to grow and, ultimately, create more jobs.

The playing field is leveled, or at least not so severely tilted in favor of those who already have what they need. But before you start thinking of crowdfunding as a painless way to raise capital, it’s best to realize that painless this isn’t. Although the JOBS Act was intended to lessen the regulatory burden for startups and younger companies, it isn’t going to be race day on the Autobahn.

The Real Costs

Not only are there certain requirements you must fulfill, but there are also costs you may not have figured. The SEC has estimated that a company looking to raise $100,000 or less would need two years of financial statements and its most recent tax return. Raise between $100,000 and $500,000 and a CPA must review the statements. More than $500,000, and you’re looking at full audit of your statements. Source & read more


ForbesHow Crowdfunding Can Supercharge Your Campaign In 2016ForbesThey say that there are about 7.45 billion people living in this world right now. Imagine that if you could get each of these seven-and-a-half billion people to contribute one cent to your project, well, you know what I [...]

ForbesHow Crowdfunding Can Supercharge Your Campaign In 2016ForbesCrowdfunding has helped a lot of businesses recently. Want to join the queue? Here's how to raise funds for your projects.and more » [...]

San Antonio CurrentSan Antonio Cat Cafe Launched 20K Crowdfunding CampaignSan Antonio CurrentAs Austin's Blue Cat Cafe turned one (and dealt with some gnarly vandalization), San Antonio's Cat Cafe launched a GoFundMe crowdfunding campaign to help open its doors. Casey Steuar [...]

BillboardCrowdfunding for His Life: How GoFundMe Helped Save a Punk Legend's LifeBillboardSo on the advice of a close friend, Julian -- like an increasing number of aging musicians without a lucrative record contract -- turned to crowdfunding, launching a campaign on the No. 1 pl [...]

Minneapolis Star TribuneSEC releases new, relaxed rules on investment crowdfundingMinneapolis Star TribuneNew rules announced this week will make it easier for small companies to raise capital from small-time investors, another step forward for Minnesota's fledgling investment cr [...]

The GuardianCrowdfunding: the new buzzword for academics needing research moneyThe GuardianArchaeologist Dr David Petts, from Durham University, has also used crowdfunding, raising almost £25,000 to fund a project on Lindisfarne, off the Northumberland coast. The dig, in June, led to [...]

How Crowdfunding Has Changed the Startup GameSingularity HubCrowdfunding has become a multi-billion-dollar industry, funneling millions of dollars into thousands of projects. Technology in particular is one of the leading categories on popular fundraising platforms like Kickstarter an [...]

The RecorderFTC Hears From Company Leaders as Crowdfunding GrowsThe RecorderSACRAMENTO — The future of crowdfunding is one of specialization, with an ever-increasing number of firms finding niches in equity, nonprofit and even creative projects silos, industry leaders told a Federal T [...]

Crowdfunding in commercial real estateJournal Record (subscription)jdavidchapman In 1997, a British rock band funded a reunion tour through online donations from its fans. This may have been the first example of a concept now known as crowdfunding. The crowdfunding industry has quickl [...]

Crowdfund InsiderWhen It Comes to Retail Crowdfunding, SAFEty FirstCrowdfund InsiderOn September 22nd, Crowdfund Insider published a post summarizing the arguments presented in our new essay entitled “Crowdfunding and the Not-So-Safe SAFE“ (forthcoming in Virginia Law Review Online). [...]

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