Finance

“Everything crowd has a silver lining” pg. 396

Entrepreneurship is defined as starting a business (Hur, 2018). One challenge many entrepreneurs face is securing startup funding, and most rely on self-funding, family funds, and bank loans to get started. However, these funds might be enough to start the business but not enough to grow the business. Many entrepreneurs then seek additional aid from an equity investment provided by angel investors or venture-capital firms (Brealey et al., 2020). Angel investors and venture-capital firms look for a startup business to invest in with high growth potential but often at the cost of giving up partial ownership of your company. They might also want to have an active role in the decision-making of your business. The show Shark Tank on ABC is an excellent introduction for people to learn about angel investors, venture capitalists and about how entrepreneurs secure investments to propel their business to the next level. However, a new way to finance startups has emerged over the years, known as crowdfunding, allowing entrepreneurs more control and flexibility to secure financing that fits their unique business needs (Brealey et al., 2020).

Crowdfunding is when entrepreneurs fund their startups with small donations from many people (Johnson, 2021). Many crowdfunding campaigns happen on internet platforms like Kickstarter, GoFundMe, LendingClub, and Indiegogo. There are four types of crowdfunding: donation, debt, rewards, and equity. Kickstarter is an example of a rewards-based donations platform where donors receive something in return for their contribution. In contrast, LendingClub is a debt-based crowdfunding site where the money pledged by backers is a loan that must be paid back (Johnson, 2021). Crowdfunding allows companies to raise funds and not give away ownership of their business if they do not want to. Crowdfunding also allows investors the opportunity to invest in new companies easily. It is often as simple as purchasing items online. My husband and I once thought about investing in a Kickstarter campaign for Peak Design. Their company is camera enthusiasts who make equipment that photographers and videographers want. Their latch system for straps, mounts, and tripods is unique and easy to use. Peak designs campaigns were rewards-based campaigns where donors would receive the product they invested in. Oculus is another example of a company that began by crowdfunding. They started on Kickstarter to develop the Oculus Rift headset, and eventually, the massively popular virtual reality headset was sold to Facebook in 2014 (Heaslip, 2019).  

Backing a crowdfunding campaign for someone’s service or product is an investment in that person’s dream. It is not simply purchasing a product, just like our tithes and offerings are not payments for services or due but an investment in the kingdom of God. “A tithe of everything from the land, whether grain from the soil or fruit from the trees, belongs to the Lord; it is holy to the Lord” (NIV, 2011). Your investment in someone’s campaign allows you to be a part of something bigger and help people make their companies happen.