By Micheal Kaufmanm, The Advantages And Potential Of Crowdfunding
Crowdfunding has bright prospects, as is evident from the fact that in the next five years alone it can provide $5 billion to rooftop solar projects – over 50 times the amount invested in such programs till now. It will also be responsible for creating around 2.7 million jobs in the US by 2020.
Entrepreneurs opting to raise capital by crowdfunding retain more internal control over their company as compared to if they partner with an institution like an investment bank. Crowdfunding also lets investors see which industries and companies other intelligent investors are investing in. Instead of a junior banker calling retail investors with a prospectus of lucrative investment opportunities, equity-based crowdfunding eliminates the middleman and provides businesses direct access to investors, who can then decide for themselves whether they wish to invest or not. Equity-based crowdfunding therefore has the potential to snatch significant market share from institutions like investment banks.
The real estate industry has become a key beneficiary of the JOBS Act, having raised around $135 million through debt and equity offerings conducted via various crowdfunding platforms in the US. Investors opting for crowdfunding find the real estate industry convenient to invest in because of the fewer complications and more tangible assets it offers as compared to, let’s say, tech startups.