President Obama called crowdfund investing “game-changing” when he signed the JOBS Act into law on April 5, 2012. In the United States, 2013 will likely be ‘the year of the entrepreneur’. Using average American can use to invest in entrepreneurs they believe in and local businesses they trust. Prior to this law, only accredited investors (less than 2% of the US population) had this opportunity. If Americans invest just 1% of their savings via crowdfund investing, this policy change will deliver over $300 billion to the small businesses, which will stimulate entrepreneurship, innovation and job creation. These results are achieved without any US government spending.
Historically, countries with the strongest economic output enjoy both stability and strength, and today many countries face serious socioeconomic challenges. Three of the most pressing challenges are employment, economic growth, and rapid urbanization. We argue that crowdfund investing shouldn’t be a part of a solution to these crises in the United States alone, but that it can be a global solution as well. It promotes economic and political stability through entrepreneurship, innovation, and employment. Crowdfund investing is a unique strategy that engages large percentages of the population in building and supporting ecosystems of economic success. A unique feature of crowdfund investing is online engagement, which has the macroeconomic impact of extending existing government and nongovernmental organization (NGO) development initiatives deeper into communities via social networks. Further, crowdfund investing provides access to capital for both community businesses (such as a bakery or a laundromat) and high-growth businesses.
Community finance is not new, it is simply a way to formalize something that has been going on for a long time via the Internet. Crowdfund investing is Web 3.0: where the social Web meets small business financing. Now, startups and small businesses can raise money from communities not just based on geography but also on shared interests and common heritages as well.
This paper explores how governments can unlock the power of crowdfund investing by enabling and business innovation. Click here for the report.