The Kingdom of Tonga and Fiji: just a few of the crowd

If you were a small company with what you believe to be a great opportunity for making money or a group of people wanting to develop an undertaking that would benefit society, where do you go for capital? A bank or other single source of funds is extremely risk adverse and would certainly want security, so may not be interested. Alternatively, one answer is to get funds from crowd-funding. Small companies have embraced crowd-funding with gusto. Supported and advertised vehemently by the Chamber of Commerce and numerous other trade bodies, crowd-funding is injecting vital capital to small businesses and social entrepreneurial ventures. Imagine you wanted to borrow $10,000. If it came from a single source it would be a high risk investment. However, if it came from 5,000 donors each donating $2, risk would be small. That is effectively what crowd-funding is and how it works. Sounds too easy to be true; what are the draw-backs; and why is it growing at a phenomenal rate?