Final answer:
Kickstarter and Indiegogo are crowdfunding platforms, which differ from funding sources such as angel investors and venture capitalists. They provide a method for a wide audience to fund projects and ventures through small contributions. Crowdfunding is an accessible early-stage capital source compared to more traditional funding methods.
Step-by-step explanation:
Kickstarter and Indiegogo are crowdfunding platforms. These platforms allow a wide range of people to financially support a project or venture by making small contributions, often in exchange for early access to products, perks, or rewards. This is in contrast to other early-stage funding sources such as angel investors, who are individuals that provide capital for a business start-up, usually in exchange for convertible debt or ownership equity, and venture capitalists, who are investors that manage the pooled money of others in a professionally-managed fund to invest in startups and young companies.
Very small companies may choose to raise money from private investors instead of through an Initial Public Offering (IPO) due to the high costs and regulatory hurdles of going public. Small, young companies might prefer an IPO over bank loans or issuing bonds because an IPO can provide them with access to larger amounts of capital and can also increase their public profile, potentially driving sales and growth. When comparing a venture capitalist to a potential bondholder, a venture capitalist likely has better information about whether a small firm is likely to earn profits due to their active involvement in evaluating and assisting in the management of the company.