When I opened our monthly Global LAVA group meeting last Friday, I couldn’t help but pronounce it out loud: “If anyone would like to know what the market trends are, check out our LAVA (Los Angeles Venture Association) meetings and see how packed the room is!” What made about 80 people to meet at rather a vicious time — 7:30 a.m. — was not a question but a matter of fact: crowdfunding, our Global LAVA’s topic of the month, is clearly on the minds of entrepreneurs.
The enormous impetus of the entrepreneurial community’s decisive move toward crowdfunding — the relatively new way to raise money via online communities — is a result of the ultimate failure of the financial system that has proved to be dysfunctional for the most self-starters in the U.S. and globally.
In the past four years, according to the National SBA survey, almost half of small businesses have not been able to secure capital; 38 percent of small businesses had loans and lines of credit either reduced or revoked. As the most recent PWC Money Tree Report revealed, the investments into seed stage companies decreased by 31 percent last year — the lowest annual seed dollars since 2003.