Demystifying Crowdfunding and Crowds

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Published: 06th February 2017
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By Bruce Wuollet
Co¬Founder, Acquisitions
Bakerson Real Estate Capital Management
Prevalence of Crowdfunding
We have all seen or heard of the websites devoted to crowdfunding. The concept of crowdfunding is still relatively new, but becoming more and more prevalent as a method of raising capital for a multitude of projects. But, do you know what crowdfunding and a crowd really are and how they work? Let’s explore them.
Crowdfunding, by definition, is the “activity or process of raising money from a large number of people, typically through a website, as for a project or small business” ( falls under “general solicitation”. In other words, marketing or reaching out to people that you don’t already know; the general public.
So, what is a crowd? Simply put, a crowd is not 3. It’s not 50. It’s not even 500. It’s more than 5,000! Developing a crowd is work. Hard work.
Types of Crowdfunding
There are four types of funds in crowdfunding. These will give you a better idea on who is using crowdfunding and how they are building their crowd.
Donation –As the name implies, this is a donation, and nothing more. When an
individual commits to this type of contribution they receive nothing tangible or returned on their investment. They simply donate to a cause they believe in or want to support. The most common donation¬based website is Another common one is
Rewards ¬This type of capital fundraising promises to deliver a product to a consumer before it hits the shelves. Basically, a person commits an amount to a company and then receives a product at a discount and before it is available to the general public. Examples of this type are www.kickstarter.comand
Debt ¬Due to changing lending laws and tightening requirements, individuals and businesses are turning to other avenues for funding their businesses and deals. This is becoming a borrower’s “bank.” Debt¬based crowdfunding sites are, www.lendingclub.comand
Equity ¬Equity¬based crowdfunding is become more and more popular. A company may receive a first position loan and use the equity in the business or product to attract investors. Or, they may solely rely on investor funds for a project. Either way, these are examples of equity crowdfunding sites,, www.angel.coand
Crowdfunding, the latest buzzword in real estate, is real. This industry is on a tremendous growth curve. This is truly an exciting time for real estate, investments and capital management.
Bruce has been creating and managing equity¬based real estate investments for 13 years. His current focus is bringing private offerings to the public through a crowdfunding platform. You can reach out to him to discuss and/or learn about crowdfunding and 506(c) capital raising by emailing

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