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Business Finance

Crowdsourcing: an increasingly popular funding alternative

As the economy continues to remain tight, and businesses struggle to secure financing, many are turning to crowd sourcing as a viable alternative.



Crowdsourcing: an alternative funding source

In recent years, social media has become increasingly more integrated into our every day lives, and it’s now making inroads into venture capitalism. As banks have become more strict with whom they lend money to, entrepreneurs have had to seek alternative funding sources in order to get their businesses off of the ground.

One of the most popular alternative funding sources is crowdsourcing, which lets entrepreneurs tell their stories to friends, family and peers via social media platforms and collect donations from the people who believe in their cause. If bank lending continues to be as cutthroat as it was this year, the number of business owners seeking alternative funding will continue to increase.

Crowdsourcing just got easier

Government officials recently passed legislation making it easier for business owners to seek funding via crowdsourcing as more and more business owners are tech-savvy, and comfortable raising funding through social media rather than being pigeonholed into more traditional methods. Sites like have become popular and allow entrepreneurs to raise money for projects in categories such as technology, food, film and publishing. Although crowdsourcing platforms initially got their start in more creative undertakings, small business owners and businesses that serve more technical industries have quickly taken to this form of alternative funding as well.

Why some companies may not want to crowdsource

Depending on what profession your business falls in, it may detract from how comfortable you are with utilizing crowdsourcing. For instance, people that are in professions that are seen as more prestigious such as doctors or lawyers, may not feel comfortable having their clients know that they solicited funding from friends and peers as it may detract from their perceived status within the industry.

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Therefore, entrepreneurs will have to weigh the pros and cons and decide if getting the funding they need to get their business off of the ground is worth clients potentially looking at the business as unstable. At any rate, for entrepreneurs looking for an alternative stream of funding, crowdsourcing is proving to be a popular option.

Destiny Bennett is a journalist who has earned double communications' degrees in Journalism and Public Relations, as well as a certification in Business from The University of Texas at Austin. She has written stories for AustinWoman Magazine as well as various University of Texas publications and enjoys the art of telling a story. Her interests include finance, technology, social media...and watching HGTV religiously.


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