Science and technology have utterly transformed human life in the past few generations, and forecasts of the future used to be measured in decades. But big changes arrive faster and faster these days. So here we've shifted our forecast to the near-term, because we're right on the verge of some extraordinary stuff. These are the trends and events to watch out for in 2013. See them all here.
On April 5, 2012, President Barack Obama sat at a small, wooden desk in the White House Rose Garden and signed the JOBS Act, one of the most transformative pieces of securities legislation written since the Great Depression. Among the 22 pages of dense legalese, one section stood out: the Crowdfund Act. Pending the creation of SEC regulations later this year, new businesses will be able to make their own IPOs, and small investors could act as venture capitalists.
Start-ups and inventors raised an estimated $2.8 billion on crowdfunding platforms such as Kickstarter in 2012, a 529 percent increase from 2009. But they could only solicit donations, presales of products, and loans. By allowing equity investment, lawmakers expect to supercharge crowdfunding, which would make nascent businesses less reliant on angel investors and banks while spurring innovation across a wider range of companies.
There are, of course, pitfalls. More than half of all start-ups fail within 10 years. "It's not clear yet whether the wisdom of the crowds will hold for picking successful businesses," says Josh Lerner, a professor of investment banking at Harvard Business School. Investor losses could lead to big disappointments, litigation, or, worse, allegations of fraud, says Bryan Sullivan, a lawyer in California. "My mother is a secretary," he says. "My father is a construction worker. Those are the kind of people who would throw $5,000 in and think they can make $100,000. What happens when it fails?"
The crowdsourced-equity model is not untested, however. The Australian Small Scale Offerings Board has transferred about $130 million to start-ups since 2007 with little reported fraud. Plus, the Crowdfund Act helps protect investors: Those who make less than $100,000 can commit only $2,000 or 5 percent of their annual income, whichever is greater. The act also requires company disclosures, so investors can do their due diligence. Once the SEC sets the ground rules, anyone who backs a great idea will stand to profit. But the biggest benefit will likely be to innovation itself.
The concept of "crowdfunding" isn't new -- that's what stock exchanges are all about. The key differences are scale (this applies to much smaller "IPOs"), transaction costs (Wall St. rakes off a lot of money for their IPOs), and the focus on venture capital. That said, I don't dispute the prediction -- crowdfunding will pay off.
This is a great article and is very inspiring for me because as a chemist I invented the handheld Vial Capper and it's currently on Rocket Hub, which is similar to Kickstarter. Those are great sites, and this article is correct, we start-up companies are serious and honest in how we use money given to us. I know for my invention, we've been able to attend the NIH Trade Show, get our patent, and manufacture prototypes (using our own funds). Now we are asking for donations so that we can have the actual product manufactured on a large scale. Alot of these start-ups are vey promising, they just need funding.
If I divide the picture in the article in half, I see the USA government on the left and the USA citizen on the right, outside their home, unemployed and yes kicked out of their own house. Still, Uncle Sam arrives to your, asking for his dollar, claiming they NEED more and MORE DOLLARS.
It's true that crowdfundding is not the fist time tested. Unemployment is just not problem of developing countries. It is the biggest problem of Developed countries like the U.S.
Population is increasing quickly and sources are not increasing. So the unemployment ratio increasing daily basis..
We must need to find the solution of this problem. Because of unemployment crime ration increasing daily basis. So we need to stop this