America’s recent Jumpstart Our Business Start-ups (JOBS) Act is raising hopes that crowdfunding will also transform the way in which firms raise capital. Duncan Niederauer, the boss of NYSE Euronext, claims that, properly done, it “will become the future of how most small businesses are going to be financed”…
A small Main Street business trying to borrow $50,000-100,000 “cannot get that money from any bank in this country right now,” says Mr Niederauer. CircleUp, a new firm that raises equity fotr small business from a restricted crowd of sophisticated “accredited” investors (rather than the general public), sees a huge funding gap for firms with revenues of under $10m in industries such as consumer products. Since its launch in April, CircleUp has already beaten its targets for this year…Robert Litan of the Kauffman Foundation, a think-tank, believes experts will be able to add “proof of concept” to social proof. Perhaps leading venture-capital firms will return to financing baby start-ups, which they long ago abandoned. They would boost crowdfunding if, say, they lent their reputations to young firms and promised to invest later if they met certain targets.
Read the rest of the article here: "Raising capital online: The new thundering herd"
