The growing popularity of crowdfunding has created a new fundraising mechanism for women and minority entrepreneurs, groups that have at times felt ostracized by the more traditional ways of raising money to start or grow a business.
Several initiatives are taking shape here in Washington. A crowdfunding Web site geared toward black entrepreneurs has come online, and minority economic development groups are educating their client base about the practice’s potential.
Crowdfunding requires an entrepreneur to mine his or her social networks and use online marketing to collect small sums of money from a large pool of individual investors. There are no credit barriers to clear or wealthy contacts to tap.
Such requirements have presented a challenge for some women and minority entrepreneurs seeking bank loans or venture capital, over and above the ordinary challenges for any start-up trying to raise money.
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