Considering the recent developments with some over-estimated and under-delivering projects, funded generously on Kickstarter, two questions pop into my head:
- How will startups that need crowdfunding evaluate their concept- or prototype-stage products and tiny companies? Just look at the recent fiasco with the IPO of Facebook (and the respective wealth of Zuck) and you will see what I mean. And keep in mind that most of the budding startups won’t have the prominent business consultants and large user base of FB.
- Are ordinary people prepared to invest the rest of their savings into said startups? The possibility of money-loss and CF-baloon burst is huge, as to me. Look at Kickstarter for references, and keep in mind that Kickstarter-campaigns are donation-based, i.e. nobody owes you anything, actually. By equity crowdfunding this is not the case. Your money are there to bring profit to YOU, not to the startup, the bankers or to be burned out.
I believe there is a missing stage between the startup’s product concept and the crowdfunding-stage. I call it prefunding and it’s part of the due diligence for the both sides. It’s the time when entrepreneurs and the potential investors must join forces and help each other. Potential investors (we can call them supporters) must validate and evaluate the startup’s product concept from customer’s point of view, thus estimating the market demand for the new product. At the same time supporters will train their investor skills at no charge and no risk. Entrepreneur must convince his potential supporters that their startup venture is viable and worthy of support, and probably provide some rewards for the best supporters. 😉
For an idealistic platform dealing with prefunding, take a look at my pet-project ‘Funding Game’ and drop me a line, if you like. It’s also a startup, so don’t expect perfection yet. Any feedback or help will be greatly appreciated. http://www.fundinggame.com/
I’ve always believed that only together we can be strong. Helping each other will ensure a better future for all.