How I Learned to Stop Worrying and Love Crowdfunding: A Brief Overview of its Role in Entrepreneurship

Abstract

The entrepreneurship path is not easy, it is a complicated one and full of obstacles. Fortunately, the advent of the Internet and the concurrent advances in technology have democratized a large number of activities that in the past remained available to a limited few; entrepreneurship is a fine example of one of the activities being democratized by technology. Within all those innovations, crowdfunding has emerged as a new form of funding and collaboration for entrepreneurs, through which entrepreneurs rely on the power of the crowds to support projects that would otherwise be very difficult to carry out alone or without the financial support offered by more conventional sources. Although crowdfunding is relatively new, it has proven to be a valuable tool for entrepreneurs in developing their projects. In this paper we will briefly explore the concept of crowdfunding and how it has evolved in its short history including some of its result so far. Furthermore, we will compare it with traditional financial models ie. VCs and see how crowdfunding fares. We will then turn to explore some of the challenges that have emerged in the nascent industry— some of which will hopefully be addressed by regulation changes in future iterations of crowdfunding models as it evolves. Notwithstanding these challenges, we firmly believe that crowdfunding has already opened up opportunities for entrepreneurs that were not previously available previously, and this is a very good thing.