Crowdfunding sounds like an appealing idea. It gives the middle class a way to participate in formation of companies, as venture capitalists do when they back entrepreneurs or well-connected investors do when they participate in initial public offerings. And it provides a way for small businesses to use technology to raise capital. But while this type of financing has the potential to boost a certain type of small business, it has limits that businesses and investors should keep in mind.
Image: Stuart Phillips shows some of the 10,000 pint containers that Red Wagon Creamery purchased with the help of money raised through crowdfunding. (Red Wagon Creamery)
