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Be realistic, and make sure you’re setting the goal at something achievable — if you can’t hit that total, you’ll be walking away with nothing but squandered good will.

Moreover, the collaboration enabled by peer-to-peer social lending and funding platforms represents a unique opportunity presented by The New Sharing Economy.

Crowdfunding will continue to evolve. Services such as Sprowd aim to make it a credible way to fund startups. Congressional Bill HR2930 could make it easier for businesses to raise equity from investors through campaigns.

Startups don't just need money -- they need expertise. In the current scheme of things, investors often provide that expertise. They became wealthy because they know something about how to run a successful business.

But in a crowdsourced model, no one investor has substantial money in the venture. So there's no one who could insist on a board seat as part of their deal, or otherwise make an entrepreneur take their ideas seriously for how to grow the business. That makes the startup a riskier venture, both for the investors and the entrepreneur.

Seeded by the Grameen Bank, industry trailblazers like Kiva and Prosper applied the concept of microlending to the Internet, spawning people-to-people lending. The newest breed of microfinance — crowdfunding — is fast growing in popularity.

Kickstarter emphasizes project-based funding campaigns, and the projects they accept generally need to have a definite end-date and clear metrics for completion and success. For businesses just starting out (like ours), the lack of an “end” to your vision may preclude you from qualifying. But where Kickstarter focuses on funding projects to completion, IndieGoGo promotes the broad funding of ideas, from for-profit businesses to not-for-profit causes to creative endeavors.

We went with IndieGoGo—we didn’t meet Kickstarter’s project-oriented criteria—and we were charged 9% on the contributions we received (a fee that gets kicked down to 4% if the campaign reaches its funding goal).

make sure someone on your team can have a strong, dedicated focus on the campaign—it won’t take off without it.

The hope is that crowd funding will give kitchen-table investors the ability to buy in to a much broader range of opportunities, and will give start-ups access to a whole new pool of capital—the money sitting in every American’s checking or savings account. Advertisement placeAd2(commercialNode, 'midarticleflex',false,'') One site that is experimenting with something like this is SlowMoney, profiled by journalist Amy Cortese in her 2010 book Locavesting. SlowMoney facilitates investment clubs that evaluate proposals from farmers and other purveyors of local agricultural goods

It gives a massive pool of investors—basically everyone—access to a wide range of companies. And it gives that wide range of companies access to a massive pool of investors.

Despite travails, van Houtryve sees a lot of promise. “It’s an intuitive model,” he says. “Backers have started to pose relevant questions. As my project proposal has made its way through social networks and attracted support from strangers, I’ve made some really fruitful new connections. In addition to generous funding contributions, several individuals have stepped forward with key contacts and very precise and helpful advice. I have already managed to make stronger photos due to their input. This is a pleasant shift over the lone-wolf existence.” The attraction of an initiatives such as Emphas.is are their transparency.

The bill provides a crowd funding exemption from Securities and Exchange Commission registration of securities offerings, with certain limitations: A $10,000 limit per investor (or 10 percent of annual income, whichever is less). A cap on the amount a company can raise of $1 million per offering (and up to $2 million if audited financial statements are provided). No limit on the number of accredited or unaccredited investors.

newer (and crowd-based) tools to monitor online reputations are emerging. Either way, the potential to unleash untold numbers of new ventures is certainly exciting for would-be entrepreneurs.

Crowdsourcing has moved to the money arena, tapping the power of larger audiences to provide funding options for startups and established businesses. A host of websites dedicated to crowdfunding are popping up, matching small businesses, soloists and artists with people willing to invest in projects they find worthy of support.

An interesting new development on this type of funding is its expansion in the area of crowdfunding entrepreneurial businesses.

Two UK companies are however pioneering the provision of finance through lending and equity investing from the crowd. Fundingcircle, founded in 2010 allows the general public to directly lend to businesses seeking finance, allowing them to quickly access capital without having to go through the banking system. So far several thousand lenders have provided loans worth some £24 million. Crowdcube, also launched in 2010, allows individuals to take an equity stake in a company raising finance.

Crowdfunding supporters argue that while raising money is the most important benefit the platform provides, another important advantage of this new source of finance is the power of "collective intelligence" i.e. the ability to mobilise the wisdom of crowd by asking investors to actively participate in new product development (e.g. by voting on their preferred product or services) and actively contribute to the due diligence of the opportunity by sharing their expertise.

The question is can scientists use crowdfunding to fund their research? Based on RocketHub’s success, it appears the answer is a resounding yes. The service is banking that science and education can do better asking an interested public to join with them in funding unique and worthy projects. Plus, the crowdfunding wave is nudging scientists to do what many artists and business owners have to do – engage directly with the public, with fans, with customers. The feedback mechanism also offers a benefit to the scientist that could help refine a project focus based on crowd support and ideas. The current rate of funding for science proposals in the U.S. is ~20%. Crowdfunding will likely increase that success rate.

The tool they use is called niche crowd-funding. Entrepreneurs set up websites for very specific types of charitable projects, like supporting small farmers in developing nations or helping victims of natural disasters. People who need backers can put fund-raising pitches on the site—and the entrepreneurs take a cut of whatever money they raise.

The owners of the niche sites are betting that people want smaller, more focused venues where they don't have to compete for attention with thousands of unrelated projects.

. FitFunder.com, which is based in Thousand Oaks, Calif., lets users connect their fitness goals with charitable causes. People who want to run a marathon for charity, for instance, can use the site to link up with a cause in need—and then solicit donations. The site charges 5% of funds raised.

But away from the crumbling of traditional structures that have for decades supported musicians, film-makers et al, there's been a feelgood story brewing online that suggests that our enthusiasm for giving money in exchange for creativity has far from disappeared. Crowdfunding is a modern spin on the ancient system of patronage, and the polar opposite of file-sharing

Slicethepie and Sellaband were pioneers that aimed to launch the careers of young musicians, and they've since been joined by start-ups such as PledgeMusic and My Major Company (MMC). Meanwhile, sites such as Feed the Muse and RocketHub have broadened it beyond music to any kind of creative project. But the biggest noise is being made by Kickstarter.

behind these headline-grabbing figures are a huge number of smaller projects that are seeing the light of day thanks only to crowdfunding

MicroVentures

Also described as peer-to-peer lending, MicroVentures works with investors as well as with those who need money to get a certain project off the ground.

companies pay $100 to MicroVentures and then send their business plan to the site for approval.

Crowdfunding is a community-engagement process between an individual or organization seeking money to create something new and a crowd of supporters who want to participate in the effort in a meaningful way. It is primarily about open collaboration among the participants that takes the form of: An Invitation to Make A Successful Project; followed by A Campaign to Engage More People in the Effort; and culminating in A Celebration of What Everyone Has Created Together.

The tools of social media enable the organic formation of peer-to-peer networks able to set agendas and aggregate resources to move toward their shared goals. Crowdfunding itself is a “sticky” idea with mass appeal because it is proving to be an effective way to democratize finance by making the exchange of money more transparent as a way to empower social action. What started out as a cool way to support your local band in getting their first recording out to their fans has evolved into a recognizable platform for bypassing bureaucratic institutions and taking action straight to the crowd.