Understanding the use of Crowdfunding and venture capital as sources of business funding to entrepreneurs is certainly useful when considering funding options for your business. Some investors see crowdfunding as the beginning of the end for venture capital, expecting its emergence slowly to become the standard. That may well be, but most likely the two will coexist quite well together. For students studying an MBA in Entrepreneurship, the understanding of both Venture Capital and Crowdfunding as sources of funding for businesses at various stages of the growth cycle could certainly be very helpful.
For those of us who see the full picture of supporting a business to success, there is a belief that crowdfunding can be an asset to everyone.
American Trends for Crowdfunding and Venture Capital
In the US, venture capital historically has been concentrated on geographical locations. The Silicon Valley is probably the country’s hottest bed for venture capital, and based on how much takes place in other areas, it is almost a necessity to relocate to the valley if you need seed funding.
Anyone attempting to put deals together in other areas of the U.S. has a difficult time, as indicated by the 2010 numbers from the National Venture Capital Association. In the Silicon Valley, venture capital per person per year amounted to almost $4,000 per person, while in the rest of the U.S. the av
erage was $43.
Erase the Geographical Lines
South Africa might not be that diverse from one location to another, but it is reasonable to believe that some areas provide more opportunity than others do for venture capital. Crowdfund offers a different way of viewing investing altogether.
The power of the internet takes away much of the location aspects of investment. Just as Americans are excited by the possibilities that crowdfund presents, South Africans should feel the same and take a long, hard look at this new investment option.
Not only does the crowdfund offer more opportunity to get investment for some businesses that need a boost to get started; the lines of geographical location have been abandoned, which allows more people from more places a chance to get noticed.
Creating Excitement in Investing Again
Every nation is looking for new ways to spur on new businesses, and the crowdfund movement is obviously a beneficial shot in the arm of the economy. Skeptical investors have shown little interest in the standard platforms available, and the more varied selections presented, the better the chances are they will again become motivated to play the market instead of sitting on the safest of investments.
Enough crowdfund advocates can make a serious difference in the number of jobs created by way of burgeoning companies. This benefits everyone and creates excitement, which can translate into a growth in the GNP.
Local Opportunity is Not the Primary Motivation
The internet has decreased the size of our world and brought our neighbors closer. No longer can financing be considered only for the local entrepreneur; it encompasses all those who have a cause and show promise to accomplish great things. Just as the worldwide web brought services from afar to our doorsteps, so does it provide investment choices we would not otherwise have without its influence.
The days of face-to-face business relationships have not altogether disappeared, but the number continues to decrease because business owners realize that it is not always a necessary part of the flow. Mixing business with personal has not always been the best of situations anyway.
Ideas can be expressed without the need for that handshake and light conversation. We have learned that some of the better deals aren’t made with the people who are the best on a personal plane, and removing the necessity of relating one individual to another is not sorely missed by a great many people.
The greatest crowdfund opportunity may or may not be your closest neighbor, but it really doesn’t matter if you make the right move. Speak with your investment professional about the aspects of crowdfund so you can make your own choices. Whether you are looking for investment opportunities or seed funding, crowdfund may be your best bet.