Explain why crowdfunding is advantageous to new entrepreneurs.

What does one do to obtain funding for a new invention, movie, or company? Do you go to the bank? Do you go to venture capitalists? Do you go to angel investors? Crowd Funding is an alternative to these traditional sources of funding. Kickstarter.com is one of the largest of the crowdfunding websites. Here a person posts about the project with a description, maybe a video and the funding needed. Backers then pledge money to the project. If the funding goal is not reached then the project is stopped along with any pending obligations of support.

This opportunity for aspiring new artists, inventors, etc., to obtain funding is happening on Kickstarter with thousands of dollars being pledged each day. The creator of the projects keeps 100 percent ownership of the project in which investors decide if they want to invest.

  • Go to Kickstarter.com and provide a description of the Project of the Day including the offerings and number of backers. Discuss the pledges, the amounts of the pledges, and the number of people offering each pledge amount. What does the pledge amount tell you about the motivation of the customers?
  • Explain why crowdfunding is advantageous to new entrepreneurs.
  • What information must an entrepreneur provide to get funding? How does Kickstarter manage the collection and transfer of pledges? Would you use this site yourself or recommend it to others?
  •  You are to produce an analysis of Kickstarter. In doing this analysis you will answer the questions asked.   Use a table to show the Kickstarter offerings and the number of backers. Then discuss these pledges and why this crowdfunding is of advantage to entrepreneurs. Using several products compare the type of information the entrepreneur needs to get funding and discuss if you would invest or recommend to others. In 3 or 4 pages, provide your discussion and analysis—we encourage the use of spreadsheets and tables to justify your response.