Crowdfunding Sheriffs

Because crowdfunders ask the public for money in exchange for the promise to deliver something in the future, it’s good to know that there are a few “sheriffs” in town.

The venture capitalists and private equity guys can afford to hire experts to conduct their due diligence. However, the masses don’t have that luxury and are relying on the truthfulness and good faith of the company seeking funding.

Under the securities laws, companies get some leeway for projections, but facts are facts. Mis-stating facts about, say, the health benefits of green coffee beans, may move you into fraud territory.

However, there are a few private crowdfunding project vetters that appear to have a level of expertise that even the state securities regulators may not have. Drop Kicker, for example, is run by two engineers and former product consultants. Others include tech writers for PandoDaily, TechCrunch and Digital Trends, as well as other experts in the various fields. Note that Reddit is keeping a running list of failed or unfulfilled projects. And there’s always for your run-of-the-mill internet scams.

Perhaps the State Securities Commissioners could create a panel of tech/science experts who would randomly select projects to review for technical accuracy.


About JeffKoeppel

I am a corporate/securities attorney in the Washington, DC area. Prior to joining the firm, I was a Senior Attorney Advisor in the Division of Corporation Finance at the U.S. Securities and Exchange Commission. I am a member of the Bars of the States of Maryland, New York and the District of Columbia. You can also follow this blog on LinkedIn at:
This entry was posted in Broker dealers, Congress, Crowd Fund Act, Crowd Fund Act of 2012, Crowd Funding At the Margins, Crowd Funding Platforms, FINRA, Funding Portals, Investments, Jobs, Legislative Intent, SEC, Venture Capital and tagged , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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