Spray and Pray Crowdfunding

“Spray and pray” is the new mantra of crowdfunding syndicates that lead investments into startups and pull in other small accredited investors.

Angel List started the phenomena that allows a lead investor to perform the due diligence and let other investors ride its coattails, hopefully to a profitable exit.

Although this democratizes investing, the risks increase if you let someone else do the analysis. So, make sure that the syndicator has the background, experience and knowledge base and actually does the work before trusting his judgment. It may also help to know if s/he’s got some significant skin in the game.
http://www.wsj.com/articles/crowd-sites-let-startups-tap-small-investors-cash-1423446571

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: http://www.linkedin.com/pub/jeffrey-a-koeppel/0/63/5a9
This entry was posted in Congress, Crowd Fund Act, Crowd Fund Act of 2012, Crowd Funding At the Margins, Crowd Funding Platforms, Film, FINRA, Funding Portals, Investments, Jobs, Legislative Intent, SEC, Small Business, Venture Capital and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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