7 Reasons to Avoid Crowdfunding

In the wake of tight credit markets, crowdfunding -- also known as crowdsourcing -- arose as a source to provide capital to fund innovative ideas. This new form of equity financing enables a company to raises funding through small contributions from a large group of individuals via an online platform. But it does have some significant drawbacks.

Drawbacks of crowdfunding include a potential negative impact on future funding opportunities, practical limits on the size of project that can realistically be funded and potential lawsuits. The author of this article recommends exploring traditional forms of financing before jumping into the crowdfunding arena.

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