Need funding for your cool new internet startup idea?

The banks may not be willing to take a risk on you since the credit crunch. Or maybe venture capitalists turned their nose up at your idea?

Well, fear not. Where in the past you would struggle to fund a new business if these traditional forms of financing were not available, now there is a new way – crowdfunding.

Crowdfunding is an exciting new way for startups to find the essential funds they need to grow. Just like with so many internet tools, it democratizes power and opportunity.

Now entrepreneurs can effectively pass the hat around to raise the money they need to start their businesses. Or indeed any venture they so desire: making an independent movie, commissioning works of art or making a music record… If you can get people to back you idea with their own hard earned dollars, then you can fund any project you so wish.

Don’t think it’s that big a deal? Well why don’t you take a lesson from London-based firm Escape the City. It has just turned down two offers of venture capital, choosing instead to source funds from the crowd in the cloud.

And they raised nearly £500,000 ($775,000) in just a single week. Not bad going we say.

They have a cool idea and it clearly resonated with people. Their website helps professionals who have had enough of the corporate monster and want to move careers. Perhaps focusing instead on something they’re actually passionate about – whether that’s starting a business, completing a creative endeavor or working for non-profits, instead of chasing the dollar.

Because people support their idea (over 300 separate individuals have contributed to the fund), it has allowed them to become the business they want to be.

The crowd still expects good ideas

Of course, the business concept still has to be sound. But because the funding and therefore the risk is spread across a larger pool, it makes access to large sums that much more achievable for startups.

In the example we’ve given you, clearly the crowdfunders are not simply throwing $50 into the pot. These are serious investors, just able to spread their risk, and pool together for the benefit of the startup and the investors themselves.

Is this the future of startup funding? Is it making you think your tech project could now be possible?