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Is crowdfunding with Kickstarter the new venture capital?

When Kickstarter first launched in 2009, it barely registered as a blip on many people's radars. That's because few people in the general public had ever heard of crowdfunding let alone how important it was going to become in the upcoming years for entrepreneurs everywhere, including here in Texas. Now, nearly four years later, the crowdfunding site is responsible for helping more than 47,000 projects find funding and has launched a venture capital revolution of sorts.

But unlike venture capital, which requires one or more investors to help pitch in large amounts of money to invest in another company, crowdfunding raises money by taking small donations from a large number of people. In the end, crowdfunding has become an easier way of gathering up the initial capital needed to start a project or company without the necessary risk associated with investment groups.

In the past few years, Kickstarter has become so popular here in the United States and abroad in the United Kingdon, that the company announced its plans to launch new platforms in Australia and New Zealand soon. While expanding their presence, Kickstarter will also give more entrepreneurs a chance to enter the market, thereby boosting the economy as well.

Although companies like Kickstarter can eliminate the need for venture capitalists, it's important for entrepreneurs to remember that they may still be subject to business laws in their own states and countries. Violating these laws can result in hefty litigation that may require the skills of an attorney in the end. Getting legal help before a situation even arises is often the best way to ensure that you are not breaking any state or federal laws while still following your dream of jumpstarting your project idea.

Sources: The Northern Star, "Kickstarter announces Australian launch," Kieran Salsone, Aug. 27, 2013

Kickstarter.com, "What is Kickstarter?"

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