When recent college graduate Bronson Chang wanted to renovate
his uncle's candy shop in Honolulu, he decided to tap his social
network for the funds via a "crowdfunding" website, instead of
seeking a loan at a bank.  Crowdfunding sites—such as
ProFounder.com, Peerbackers.com, Kickstarter.com and
IndieGoGo.com—allow entrepreneurs to raise money collectively
toward a monetary target. Entrepreneurs can create a profile on
a crowdfunding site listing their monetary goals, an explanation
of how the funds will be used, and an end-date for the campaign.
Once the information goes live on the site, investors can pledge
money toward the entrepreneur's goal. These sites typically take
a small percentage of the funds that an entrepreneur takes home.
In a difficult climate for raising money, more small-business
owners are using crowdfunding networks to find cash for starting
up or expanding. The amounts that entrepreneurs raise are
usually less than $10,000, and investors often are promised only
token compensation such a