Discover how entrepreneurs are raising capital through collective financing—and what experts like Daymond John and Mark Cuban say about it.
In today’s evolving financial landscape, alternative funding methods are revolutionizing the way entrepreneurs and small businesses access capital. Three popular models—crowdfunding, crowdlending, and crowdequity—are leading the charge. These collective financing strategies originate from the sharing economy, where underutilized resources are pooled and leveraged for mutual benefit—think Uber for rides and Airbnb for housing.
- Crowdfunding: Community-Powered Capital
Crowdfunding is perhaps the most well-known form of collective financing in the U.S., largely thanks to platforms like Kickstarter, Indiegogo, and GoFundMe. It allows entrepreneurs to raise small amounts of money from a large number of people, typically in exchange for early access to products, exclusive perks, or simply as a show of support.
“Crowdfunding allows you to test your product, validate your market, and build a loyal customer base—all before you even launch,” says Daymond John, entrepreneur and investor on Shark Tank.
In the U.S., this model has helped thousands of startups raise millions without giving up equity or taking on debt. Creative campaigns that tell a compelling story and offer engaging rewards tend to perform best.
- Crowdlending: Loans Without Banks
Crowdlending (or peer-to-peer lending) is a debt-based model where individuals or small businesses borrow money directly from investors via platforms like LendingClub, Prosper, or Funding Circle.
Unlike traditional bank loans, crowdlending offers:
- Lower interest rates
- Fewer requirements
- Faster approval times
“For many small businesses shut out by traditional lenders, crowdlending platforms provide an affordable and flexible alternative,” notes Mark Cuban, billionaire entrepreneur and investor.
Lenders receive returns through interest payments, and borrowers benefit from more accessible financing. In the U.S., the market has grown rapidly, especially as banks tighten credit access for small businesses.
- Crowdequity: Democratizing Startup Investment
Crowdequity allows individuals to invest directly in a startup or small business in exchange for ownership shares. This model is growing in popularity thanks to platforms like SeedInvest, StartEngine, and WeFunder, particularly after the JOBS Act of 2012, which opened up private investment to non-accredited investors.
Entrepreneurs post their business pitch, financial goals, and equity offering on a platform. If enough investors commit within a set time (often 60–90 days), the funds are released and the project moves forward. If not, contributions are returned.
“Crowdequity lets regular people invest like venture capitalists,” explains Naval Ravikant, co-founder of AngelList. “It gives startups access to capital and turns customers into shareholders.”
The risks are higher than other models—investors aren’t guaranteed a return—but the potential upside can be significant.
While traditional financing remains dominant, collective financing offers an inclusive, tech-enabled, and community-driven alternative. For example:
- BrewDog, a craft brewery, raised over $100 million through equity crowdfunding.
- Oculus Rift, the virtual reality company, was crowdfunded on Kickstarter before being acquired by Facebook for $2 billion.
- Kiva U.S., a nonprofit crowdlending platform, offers interest-free loans to underserved entrepreneurs, including many immigrants and women-owned businesses.
Whether you’re considering crowdfunding, crowdlending, or crowdequity, here are a few tips:
- Tell a great story. Your mission and impact matter just as much as your product.
- Leverage your network. Early support builds momentum.
- Understand the platform rules. Each platform has different timelines, fee structures, and legal requirements.
- Deliver on promises. Transparency and follow-through build long-term trust and credibility.
Conclusion: A Powerful Funding Alternative for U.S. Entrepreneurs
As financial tools evolve, collective financing is becoming a game-changer—particularly for underrepresented entrepreneurs who lack access to traditional funding. Whether you’re launching a tech startup, a community coffee shop, or a social impact venture, these models offer new paths to growth, innovation, and financial independence.
