Will Crowdfunding Replace Angel Investing?

From dating to gambling to getting a degree, it seems there’s little that can’t be done online these days. But would you guess another thing you can now do online is fund early-stage businesses with your own money, and receive equity in return?

Startups must get their capital from somewhere, and two significant sources of it are angel investing and online crowdfunding. Angel investing – when affluent individuals invest their own money into startup companies in exchange for equity – has been in practice since the late 1970s, but saw a resurgence post-2007 when the recession ate up traditional capital. Online crowdfunding, on the other hand – when startups raise funding from a large number of people via an online platform – is a form of “alternative finance” that’s rapidly growing and evolving. So much so, in fact, that there’s talk it will surpass or even replace angel investing.

Is such a shift possible? Crowdfunding was valued at $34 billion in 2015, and is projected to surpass both angel investing and venture capital this year. In addition, …

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