The above article is a thorough overview of how to present your business online for the purpose of generating interest from donors and investors.
P2P? Microlending? Crowdsourcing? VC? It seems that there is a lot of money out there just waiting to be snatched up, right? A primer:
VC typically takes a substantial portion of the ownership rights to your company in exchange for a large infusion of capital after a thorough vetting process. VC doesn't just drop out of the sky and invest because they like you (though your family might...), they want to see a track record, a workable plan, and probably some preliminary results for your product.
Microlending is trending strongly as well. Kiva.org is an example of microlending to charitable effect: in developing countries, as little as $25 USD can help a foreign entrepreneur start a business. Kiva boasts a high repayment rate because part of the bargain is that the entrepreneurs must pay back the loan plus modest interest; lenders typically donate the interest to Kiva's operating costs and take a tax deduction. There are also services like this available domestically. It's sometimes called peer-to-peer banking. There is more than enough material on this subject for another blog post later.
Crowdsourcing is the opposite of Venture Capital ("VC") and angel investing. It may appear more democratic: many people from different walks of like can contribute small amounts in exchange for token goods or services, or contribute more for a significant product. Often, they are gifts, not loans.
Kickstarter.com and its ilk are arguably more charitable because the money is not paid back to the donors. The entrepreneur presents a specific project and determines what certain levels of sponsorship earn a donor what good or service produced by the project. One of my good friends is a jewler and metalworker (please say hello to Kest at www.vagabondjewelry.com or www.thebookofimaginarybeings.blogspot.com), and she pulled together a specific project to make wearable art based on each painting in a particular storybook. The project was finite, had known costs, and a set end date (one year). She offered different services for different levels of sponsors, such as hand-drawn greeting cards made to the donors specifications. She raised more money than she asked for and was pleased with the results.
But is your business going to benefit from crowdsourcing? As you pull together your promotional materials, consider the protections you have in place to safeguard your ideas. The risk of going public to get funding can hurt your ability to patent your inventions later. Not to mention the dangers of losing the first-to-market advantage if a larger competitor sees your idea and markets his own version before your funding even clears. Take a deep breath: nothing is free. There are many avenues to get development capital and many ways to promote yourself and your assets practically, and Hawley Legal Resources, LLC, is happy to speak with you about all of them.