Buchwald Law Discusses Crowdfunding’s Role In Startup Culture

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Steven Buchwald of Buchwald & Associates (http://buchwaldlaw.com), a leading provider of legal services for entrepreneurs and startup investors, today weighed in on the prevalence of crowdfunding in entrepreneurial culture.

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With several high-profile successes on sites like Kickstarter, crowdfunding has become an attractive option for entrepreneurs looking to get a project off the ground.

According to Crowd Expert, crowdfunding services raised over $34 billion in 2015, with a projected growth of 75-100% in 2016. It’s an incredibly fast-growing industry, with new campaigns starting on a daily basis. And with the recent JOBS act, which legalizes crowdfunding, it stands to attract a great many entrepreneurs.

“With several high-profile successes on sites like Kickstarter, crowdfunding has become an attractive option for entrepreneurs looking to get a project off the ground,” explained Buchwald. “It eliminates one of the greatest challenges involved in starting a business - namely, securing the initial funds. It also serves as a proof of concept, demonstrating that there is a market for a burgeoning startup.”

Buchwald cautions against relying wholly on crowdfunding, however, especially in a business’s early stages. The average successful crowdfunding campaign only raises around $7000 - nowhere near enough to launch many businesses. In addition, it deprives an entrepreneur of potentially invaluable connections with other businesspeople, while also carrying with it a high chance of failure.

“Crowdfunding can be a powerful tool for individual projects,” explained Buchwald. “However, it cannot fully replace other, sources - nor should it. It’s been said that good investing is only twenty percent money; the rest is networking and expertise. The investment process brings you face to face with experts in your field, something crowdfunding cannot replicate.”

There are certain situations where crowdfunding may be a suitable alternative. For example, any project likely to see extensive use by consumers, or a side project for which your startup lacks the budget could benefit from a stint on Kickstarter. But for major projects and initial costs, traditional investors are a far better route, said Buchwald.

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About Buchwald & Associates
Founded with the intent of providing legal services to tech startups, Buchwald & Associates focuses on corporate and intellectual property law, internet law, international mergers & acquisitions, structuring complex transactions, and technology transfer. It also represents individuals in small and mid-sized companies on immigration and naturalization issues. Featured in multiple publications such as Inc., Entrepreneur, Forbes, and TechCrunch, Buchwald & Associates is one of the leading legal authorities for business professionals, particularly entrepreneurs and investors.

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