Crowdfunding Proving To Democratize Startup Financing

Harvard Business Review says that crowdfunding is more about building a community and validating demand for your product than just raising money.

Although timing is important, crowdfunding circumvents the money gate keepers (angels, venture capitalists, or private equity firms) by going straight to the public with an idea.

It gives contributors a sense of ownership in the project and a sense of obligation in the crowdfunder.

Dr. Mollick’s studies show that:

  • Crowdfunding allows new technology to blossom;
  • Only a few crowdfunded projects (~9%) fail to deliver;
  • Crowdfunding increases the diversity of ideas and allows for technologies to piggyback on other successes;
  • Crowdfunding breaks the glass ceiling and women have outfunded men to date;
  • The crowd has been as successful as the supposed experts in picking winning projects.

You don’t need a rich dad now, just a diverse group of backers who have faith in the concept.

It appears to be a win-win.

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 accredited investor, Crowd Fund Act, Crowd Fund Act of 2012, Crowd Funding At the Margins, Crowd Funding Platforms, Film, Funding Portals, Investments, Jobs, Legislative Intent, SEC, Small Business, technology, VC, Venture Capital, Wall Street and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

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