Many crowdfunding websites run an escrow system, meaning the money is only released to the project provided the criteria for investment are met. If not the money is returned to the investors. If you are considering investing it’s worth checking this. Other crowdfunding sites simply forward the money straight to the project.
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People seeking funding set out exactly how
Is it legal? s it legal?
There have been problems with crowdfunding in the US, due to the restrictions placed on individual investors by the law. If direct profit is being offered to investors as a return, then this may fall foul of securities regulation. However, the law has recently been changed in the US to enable crowdfunding more easily.
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What notable projects have come from crowdfunding?
The news is currently filled with crowdfunding success projects. From the initial arts projects that started the ball rolling, the phenomenon has expanded to all sectors. Here is a random pick of some of the more noteworthy projects:
• Elite: Dangerous, a video game requiring development funding raised US $1.25 million in 2 months.
• Pebble Smartwatch raised US $10.25 million to get their e-paper watch into production. The first $100,000 was raised in 2 hours.
• One website is raising money to save an artist’s eyesight.
• One writer funded his walking tour of Europe, including receiving pledges of places to stay from funders on a crowdfunding site.
With Kickstarter.com alone raising $319 million in 2012, it’s never been a more interesting time to raise money. Crowdfunding is a genuine option to raise money for that project you are seeking to further, and for investors represents a great opportunity to meet creative and innovative people and get in at the ground floor.