Does crowdfunding work for early stage growth companies?

This is a guest post by Christopher McDemus of MCD Law Partners a law firm specializing in startups and technology businesses, as part of our Guest Contributor Week. Want to have an op-ed or feature you’ve written to appear on TP, now or in the future? Drop us a line.
Disclosure: MCD Law Partners is a sponsor of Switch.

 
I guess crowdsourced funding or “crowdfunding” – as it seems to be known – has reached mainstream now that The Wall Street Journal (article), Knowledge@Wharton (article), TechCrunch (article) and The Economist (article) have all written articles on the topic.  The earliest article I found regarding crowdfunding was a Times article from 2008, so the concept is still relatively new.
By now, most people understand the concept of crowdsourcing and if you combine that concept with trying to raise money for something then you’ve got crowdfunding.  It’s a collaborative way to fund a project.  Given that the average amount crowdfunded appears to be somewhere between $2,000 and $10,000, I’d suggest that crowdfunding slides into the financing continuum somewhere around the “friends and family” level – generally the financing stage during which you are looking for smaller amounts of capital for market research or proof of concept.  Although $2,000 to $10,000 would still be small even by friend and family round standards.
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