Crowd-funding 101, how to raise money on the web
Entrepreneurs are pooling small

Crowd-funding 101, how to raise money on the web

Posted:Apr 03, 2012 4:13 PM ET

Last Updated:Apr 04, 2012 8:54 AM ET

More than 80,000 internet users have pledged to pony up at least $15 each to help a group of entrepreneurs called Double Fine Productions make a new adventure computer game. In return, the funders are being promised perks that range from a copy of the game to lunch with its designers.

Together, they have raised $3.3 million for the project through the "crowd-funding" website Kickstarter.

Similar initiatives have been used to raise over $175 million to fund 20,000 projects ranging from films to apps to concerts, making crowd-funding a hot phenomenon.

"It evokes the romanticism of the internet," says CBC technology columnist Jesse Hirsh. "It's sort of the right ingredients that give people the optimism, the hope in a difficult economy that they might be able to bypass the bank, bypass the stock market and find people who support them on a much smaller social scale."

In March, the U.S. Senate passed the Crowdfund Act, which will allow companies to raise up to $1 million a year through crowd-funding via registered portals that commit to a list of investor protections.

Hirsh explores the promise, limitations, and risks of crowd-funding, how things change under the new U.S. legislation and what crowd-sourcing options are available in Canada.

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