The term does not sound particularly financial or sophisticated. However, the crowdfunding industry has already had an impact as a new source of funding for entrepreneurs who have been unable to procure angel support. One thing is clear - crowdfunding makes the playing field more even.You do not need to have a great tech or bio concept, or be capable of turning it into a $50-100 million business.

Barriers to entry are considerably lower, making it possible for a wide range of firms to get off the ground. The government recognized the enormous funding shortfall facing startup firms, and deserves credit for passing the Jumpstart our Business Startup Act (JOBS) in April 2012. That said, most entrepreneurial firms are still reading through the fine print of the legislation to in order to understand  the framework and limitations of this funding source.

Certainly two of its most important selling points are that it is much easier to sell stock to private investors, and the overall costs are notably lower than other sources. On the downside, the amount of equity that can be raised tends to be, on average, much less than would be the case with angels.

However, it appears that crowdfunding can essentially replace an initial round of angel funding, making successful firm launches more probable. Secondly, crowdfunding support makes startups more attractive to angels and venture capitalists, increasing the chances that they will qualify for additional rounds of financing from these sources down the road.

Significantly, the crowdfunding industry has already demonstrated an ability to attract considerable amounts of capital. As of mid-2012, one intermediary has raised over $200 million for new businesses.

Jed Cohen co-founded RocketHub in January 2010, when crowdfunding was still much more of a concept than an industry. RocketHub is an online funding platform primarily for non-technical and creative entrepreneurs. The company's premise is that most entrepreneurs don't have connections to those who can contribute large sums of money to their projects. However, they have or can plug into huge social networks which are capable of raising large amounts of capital by aggregating high numbers of small contributions. The firm has been featured in articles in the New York Times, Wall Street Journal, and The Economist. Despite focusing on creative ventures, Jed is hardly a non-tech person, having graduated from Harvard with a degree in Astronomy & Astrophysics.

Steven Cohen is SVP and Deputy Commissioner at Empire State Development Corporation (ESD), where he heads the Department of Community Economic Development. ESD is a division of the New York State Department of Economic Development. His team directs a wide array of programs and initiatives to help entrepreneurs and small businesses maximize their opportunities for success.  Steve has led efforts to create, implement, and refine programs which support business development and increase access to capital. Over the past year, division programs facilitated the creation of hundreds of new businesses, hundreds of millions of dollars in capital investments in startup and small businesses, and the creation of thousands of jobs.

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