For years, artists have been able to finance their projects through Kickstarter and other crowdfunding websites, basically soliciting small sums of cash from many people over the internet.
This method of raising capital is now available nationwide to entrepreneurs seeking to fund their start-up businesses. In exchange for money, investors will own shares in a private company.
Though small investors might fantasize that this is the way to get in on the ground floor of the next Google or Facebook, consumer advocates are wary and suggest investors should be, too. “It’s highly speculative, and you should only invest money you expect to lose,” says Barbara Roper, director of investor protection for the Consumer Federation of America. “Most early-stage start-up companies fail.”
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