Windfall or bust? Crowdfunding may not turn out to be boon that many small businesses expect

New York AngelsSmall businesses looking for a windfall of investor money from crowdfunding may find that it’s more of a bust.

President Barack Obama and members of Congress have touted a law that makes crowdfunding, a method of soliciting money over the Internet, as a way for startups and other small companies to raise money and create jobs. A year after the law was passed as part of the Jumpstart Our Business Startups, or JOBS, Act, entrepreneurs wanting to raise as much as $1 million annually from online investors are still waiting to get going. The Securities and Exchange Commission is in the process of writing rules to regulate the process. 

But business owners anticipating their chance to solicit online investments may not want to count on crowdfunding to finance their entrepreneurial dreams. People involved in small business investing warn that many entrepreneurs will find that potential investors aren’t interested in their ventures because they don’t have an attractive track record or look like they’ll provide a good return.

“I think there’s going to be an enormous amount of companies that go online, and nothing happens,”says Brian Cohen, chairman of New York Angels

Read More at WashingtonPost / AP

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