The University of Tennessee, Knoxville

Haslam College of Business at the University of Tennessee Anderson Center for Entrepreneurship & Innovation. Haslam College of Business at the University of Tennessee


Crowdfunding

Crowdfunding is a relatively new way to fund a business.  This approach allows individuals to pool their money, usually via a website, and invest in business ideas.  Sometimes people invest because they like the mission of the company; others do it to make a profit.

Advocates of crowdfunding say that it allows good ideas to attract start-up cash through the wisdom of the crowd. The new company also has a built-in customer base (through its investors and their personal promotion via word of mouth).  However, if you disclose your idea too early, it can be copied and developed by competitors with better financial means.  Additionally, a significant risk is the possibility of getting ensnared in securities laws.  In November, the House of Representatives passed The Entrepreneur Access to Capital Act amending the Securities Act of 1933. The bill would allow a new registration exemption for companies raising crowdfunded financing. Companies may raise up to $1 million within a 12-month period without registering the securities with the Securities and Exchange Commission (SEC).

Critics of crowdfunding also say that it can cause problems down the road primarily in two areas:

If this is a source that you think would help you, here are a few websites for crowdfunding of entrepreneurial start-ups:


Anderson Center for Entrepreneurship & Innovation ~ 418 Haslam Business Building
Knoxville, TN ~ 37996-4140 ~ Phone: (865) 974-5126 ~ Email: ACEI@utk.edu

Haslam College of Business Facebook Page.   Haslam College of Business Twitter Page.
 

The University of Tennessee, Knoxville. Big Orange. Big Ideas.

Knoxville, Tennessee 37996 | 865-974-1000
The flagship campus of the University of Tennessee System