Not much is currently known about this new lending environment. The rules are still being debated and all we know is that this mechanism will be possible in the near future. This type of idea was popularized by kickstarter.com. Kickstarter.com is a way to get projects funded through the help of the community. The community is rewarded with a gift for donating to the project and the good feeling they get from investing in their community.
Crowdfunding as defined in the JOBS Act will be a way for entrepreneurs to sell small bits of their company to investors who would like to make smaller investments.
The biggest downside to this is that the vetting process is not as rigorous as it is when you seek other types of funding. If I, as an entrepreneur, sell 100 small pieces of my company to 100 individuals and I subsequently sell it or attempt to get further funding, that process is quite a bit more complicated because of the diverse interests of the group.
Crowdfunding Expectations:
