Could the Internet and crowdfunding, which have helped level the playing field for so many other aspects of life and the economy, do the same for investment?
Online crowdfunding is skyrocketing, from just $2.7 billion in 2012, forecasted to be $34 billion in 2015. There are different kinds of online crowdfunding, however, and not every kind qualifies as a real source of investment capital.
The best chance for crowdfunding to transform investing lies in a lesser-known but rapidly growing slice of the crowdfunding pie known as equity crowdfunding. In equity crowdfunding, just like regular equity investments, entrepreneurs sell shares of their business to private shareholders, shares that can potentially be sold later at a much higher price per share. That's how you attract real investment capital, and that's why some already predict that equity crowdfunding will eclipse venture capital funding as the leading source of startup capital by 2020.
Now imagine that in 2020, the new leading source of startup capital is one in which there is a level playing field for minority-owned firms. Based on the experience of at least one equity crowdfunding platform, it's quite possible that will be the case. In an internal sample of 5,000 companies using EquityNet, the world's largest equity crowdfunding platform, 32 percent were minority-owned, including 9 percent owned by African-Americans. What's more, minority-owned firms surveyed on EquityNet, which is based in Fayetteville, Arkansas, were achieving the same funding success rate (20 percent) and seeking similar amounts of capital on average (around $1 million) compared to non-minority-owned firms on EquityNet.
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