Be Wary Of Crowd Funding Start-Ups

By AAII:

Later this year, or early next year, you will have the chance to buy shares in small, growing companies through a process known as crowd funding. If an offering seems interesting, tread carefully, do as much research as you can and do not commit any money you are not willing to lose.

Crowd funding is the process of raising money from a group of people. It is currently used for a variety of purposes, from charitable efforts to political campaigns. Some websites, such as Prosper.com, allow businesses to access crowd funding to obtain loans. Others, like RocketHub, allow organizations to raise money for a certain goal in exchange for rewards such as a music album or a book. (Crowd funding is also called crowd financing.)

The Jumpstart Our Business Startups Act (aka the JOBS Act) turns crowd funding into a source of venture capital. The act, which President Obama signed

Complete Story »