TASMANIANS with risky business ideas could be the next to benefit from crowdfunding.
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Crowdfunding is the concept of funding a project or venture by raising small amounts of money from a large group of people.
Most crowdfunders set themselves a goal of how much they want to raise and then put a timeline on how long they want it to take to raise it.
Bitlink managing director James Riggall said crowdfunding was an important addition to people's options for funding businesses and products.
"Traditionally if you wanted to start a business, you needed to get some capital to do it," Mr Riggall, who is also the president of Startup Tasmania, said.
"You had to go to a bank and get a loan, and to do that you had to have a fairly good amount of security, so that ruled a lot of people out, or you needed to get an investor to invest in your product.
"What crowdfunding does is it slips in underneath all those kind of structures and allows people to go straight to their customers and get advanced funding for products and ideas.
"That means that ideas that might not necessarily be the scale to get a big investor interested can still find success."
He used the example of the Oculus Rift virtual reality headset.
Makers of the headset struggled to get investors initially, but there was consumer demand.
"They were able to raise a lot of money by crowdfunding to do their first product and get it out of the market ... about a year later, they were acquired by Facebook," Mr Riggall said.
Crowd-funding website Pozible's founder Rick Chen said that while his website had been around for five years, he had recently noticed more businesses were using it.
He said previously it had mainly been artists using it to get albums out, but now companies were using it, especially farming businesses, as a way to test products and see if there was demand.
"It's going to evolve and it's going to become more mainstream," Mr Chen said.
Mr Riggall added that it was going to become a fundamental option for people and because so many businesses were going to use it, they needed to ensure they built community first.
"Crowdfunding is not money for free," he said.
"It's not something that just happens automatically and succeeds.
"It's not a roll of the dice: there's a lot of work that goes into a successful crowdfunding campaign, and at the heart of it is having a community around your business that are going to support that campaign and share it with their friends."
The future of crowdfunding is already being discussed.
Conversations are already being had based on: if people contribute, can they then make an investment out of it, if the project succeeds?
"That could transform small businesses in a big way," Mr Riggall said.
Crowe Horwath Launceston tax advisory manager Luke Richardson said each different crowdfunding model that businesses could use had varying tax and GST implications.
"As this is a complicated taxation issue, I would encourage businesses to speak to their accountant to consider what implications engaging in crowdfunding will have on their business and taxation affairs," Mr Richardson said.
