Crowdfunding?

[Brendan]

I recently came across this term; Basically it is the term used when a crowd of people pool their money together to invest in a business or idea.

So, say for instance I wanted to start a business and I asked for expressions of interest for crowd funding and I was giving away 40% of the business and I needed $10,000..

I would seek out say 100 people and get them all to invest $100, this would then give them a small share of the business, then any profit made would be equally distributed to the micro share holders or 'crowd funders'..

I spotted this on springwise, where a fashion label is doing just that - Springwise: Adopt-a-designer program for crowdfunded fashion (http://www.springwise.com/fashion_beauty/adoptadesigner_program_for_cro/)

I think its a real innovative way to raise money.. what do you think, and what would be some good business models it would apply to?

[J_D]

Sounds like a great idea for a 'crowd funding' community.. Are there placed that currently facilitate this?

I like the idea of Crowd Funding.... just as i said above.. how hard / easy is it to find 100 people who are willing to part with $100?

JD

[daggydoo]

Let it be know brendan there are actually business out their right now using this concept such as http://www.fortune5minutes.com (http://www.fortune5minutes.com/join.php?id=4957) P.S (donot join ), anyway people donot see it that way. One other program is http://clubfreedom.biz/index.php?page=home&sponsor=tjtravels&lang=en P.S ( donot join), they use the same thing but at high cost and more people.
Personally I think it is a great idea that you stated and it can work.
P.S why i say donot join well it is a waste of time and money to many holes in the program

[The Y-man]

Just be aware in Australia, it is illegal to raise funds without a prospectus UNLESS you can meet the 2-12-20 rule:

No more than $2 million over a rolling 12 month period from no more than 20 people.

Please check asic.gov.au

Cheers,

The Y-man

[fundbreak]

Hi Brendan,

It's interesting to see you recognised this business model nearly 2 years ago.

I think Crowdfunding is starting to more recognition as a viable and innovative way to raise funds.

My business partner and I are currently creating a platform for individuals and organisations seeking funds in Australia to post a project or idea to the world. Our initial response has been great.

We hope to launch the website http://www.fundbreak.com.au Mid April 2010 if you keen to learn about the concept.

Regards,
Alan

[remarkablemike]

Just be aware in Australia, it is illegal to raise funds without a prospectus UNLESS you can meet the 2-12-20 rule:

No more than $2 million over a rolling 12 month period from no more than 20 people.

Please check asic.gov.au

Cheers,

The Y-man

There is a way to legally raise funds under a class exemption that lifts the 20/12 rule to $5million, there are also exempted categories under the 20/12 rule, for sophisticated, overseas or professional investors, they do not count towards the 20/12. The Australian small scale offering board has this exemption and is a good place for Aussie businesses looking to legally raise capital. ASSOB Subscribers Area (http://www.assob.com.au)