New crowdfunding sites are springing up every month and more and more entrepreneurs are looking to these sites for money. Despite all the hoopla, crowdfunding is not currently a good alternative for most start-up or small businesses. Here are five things you should know about crowdfunding.
Projects, Not Businesses
The majority of crowdfunding sites cater to one-time creative or charitable projects, not ongoing businesses. The funding comes in the form of donations. The funders may get some type of reward — such as books, or invitations to films or concerts — related to the projects. But they do not get their money back. Two of the most successful sites that serve the creative market are Kickstarter and IndieGoGo.
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