207 Reber St. - Suite 100 - Wheaton, IL 60187    |    (630) 517-2950    |    Get Office Directions

Paulson Wealth Management Logo

Exceptional Service, Confident Future

000Paulson Wealth Management Facebook   000Paulson Wealth Management Twitter   000Paulson Wealth Management LinkedIn  

Crowdfunding—Capital for the 21st Century

One of the earliest examples of crowdfunding occurred in 1884 when funds ran short for building the Statue of Liberty’s pedestal. The publisher Joseph Pulitzer used his newspaper to appeal to Americans to donate the money needed to complete the pedestal’s construction. Over $100,000 in six months was raised from more than 125,000 people.¹

But it took the Internet to truly put the wind in the sails of this unique form of fundraising. According to the World Bank, crowdfunding in developing countries alone will reach nearly $100 billion by 2025.²

Crowdfunding Roots

Up until now, the primary use of crowdfunding has been to find donors to support the personal endeavors of artists, inventors and filmmakers. In return, donors may receive a perk, recognition, or a product as a form of gratitude. These tokens of appreciation are often tiered to be more attractive the larger a donor’s gift.³

Crowdfunding has not been generally viewed as an investment and thus has escaped regulatory oversight or supervision.

Crowdfunding Grows Up

Until recently, crowdfunding to solicit investments from the general public was not allowed. However, with the passage of the JOBS Act of 2012 and recent rulemaking by the Securities and Exchange Commission, the table is now set for raising equity and debt capital for businesses, heralding a new era in capital markets allocation.⁴

Crowdfunding sites are springing up like mushrooms following a heavy rain. Not only are they multiplying in number, but they are also beginning to specialize.

Crowdfunding continues to gain momentum as more people search the Internet for new financing choices and fundraising alternatives. It’s strongly recommended that you take the time to research and investigate crowdfunding sources before making any commitment.

  1. National Park Service: Statue of Liberty, 2017
  2. Forbes, March 15, 2016
  3. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
  4. SEC.gov, March 10, 2017

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2019 FMG Suite.

Share |
 

Related Content

Acres of Diamonds

Acres of Diamonds

In life it often happens that the answers to our most pressing questions are right in our own backyards.

Creative Ways to Motivate Your Employees

Creative Ways to Motivate Your Employees

Five creative (and inexpensive) ideas for motivating your employees.

Managing Your Lifestyle

Managing Your Lifestyle

Using smart management to get more of what you want and free up assets to invest.

 

Have A Question About This Topic?







Thank you! Oops!

Saving on Fitness Center Membership Costs

There are ways to improve your physical fitness without denting your fiscal fitness.

Prevent a Rift: Money Tips for Newlyweds

Couples may be able to head off many of the problems in a marriage that money can cause.

The Financial Literacy Crisis

Many Americans are operating their personal finances with only the barest minimum of knowledge.

View all articles

Comparing Mortgage Terms

Estimate the total cost in today's dollars of various mortgage alternatives.

Bi-Weekly Payments

This calculator estimates the savings from paying a mortgage bi-weekly instead of monthly.

Should I Pay Off Debt or Invest?

This calculator will help determine whether you should invest funds or pay down debt.

View all calculators

Managing Your Lifestyle

Using smart management to get more of what you want and free up assets to invest.

View all presentations

Choosing a Mortgage

Selecting a mortgage isn't an easy process. Get a better understanding of how professionals make the right decisions.

What to Do When You Lose Your Wallet

Ever lost your wallet? Frustrating. Here’s what you can do to keep yourself safe.

An Arm and a Leg

A visit to the hospital can be painful, for both your body and your wallet. Don’t let it be more painful than it has to be.

View all videos