3 Reasons Why Crowdfunding Is Poised to be the Future for Small Business Funding

It actually works

Just yesterday, congressional oversight investigators determined that there’s been over $1 billion in PPP fraud. Our tax dollars have seemingly been shoveled into the pockets of wealthy business owners, yet over in the crowdfunding arena, there’s been zero fraud reported to date. 

Equity crowdfunding was designed for Main Street to access funding after the 2008 recession and has been steadily on the ascent since its inception. In March, Wefunder had reported their best month ever, in July, equity crowdfunding smashed 3 records of their own. So, the crowdfunding ecosystem is healthy, functional and scaling—unlike big banks and venture capitalists who have been particularly useless with regards to sustaining small businesses (especially minority owned) with readily accessible cash.

It offers equity

Equity is a major stepping stone towards building generational wealth, and the crowdfunding ecosystem welcomes the 300 million unaccredited investors who are habitually shut out of early Wall Street opportunities. Equity crowdfunding creates local investors who are invested (ha!) in the success of their community. Local investors support what they like and use, plus, they have a vested interest in recruiting others to patronize these businesses as well. Now that’s built-in organic marketing and retention! The ripple effect of local investments are powerful for communities and in the equity crowdfunding space, with ownership comes relief.

It’s a jobs engine

Minorities have been hit especially hard by the pandemic induced recession and lack of PPP relief. In the crowdfunding space, minorities do exponentially better raising money than in the venture capital arena. Successful crowdfunded companies are a “proven jobs engine” which on average, can create and support a total of 54 direct and indirect jobs. Americans need employment now more than ever, and entrepreneurship in the crowdfunding space can almost certainly bring the economy back from the brink. Did we mention that for each dollar spent at a small business, 67% of it stays in the local community? Crowdfunding connects underfunded entrepreneurs with money to build their business, create jobs and bolster their local communities. What’s not to love?

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