They sound great in theory but not in practice. They violate securities laws in most juridsctions (because they are public offerings and hence need a prospectus). As a VC I want proprietary deal flow not something public
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Not so surprising that there'd be a dislike of such services from the VC community. As with any democratization those in power are disrupted and find fault. Do you think perhaps though that something like Kickstarter might in fact be something even the VC community can find value in...even as say an early vetting process for larger ideas?
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Crowd-sourcing funding has certainly worked for smaller amounts (think Kiva.org) and companies have obviously navigated the securities red tape as we've seen the launch of things like https://www.profounder.com/ (actually started by Kiva founder Jessica Jackley). Seems like an interesting way to raise initial seed capital to get a proof of concept - a fringe benefit is also potential early stage feedback on product/market fit.
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1 vote by Kenneth Leigh Breeze Jr.,
But Kickstarter and most crowdfunding services are not for for-profit companies seeking capital. There are only a handful of crowdfunding sites attempting to address all securities regulations. One is Profounder. The other is SeedUps which originated in the UK and is, I've heard, making a play for the U.S. market. Crowdfunding sites are great in practice for certain projects that may not have found funding otherwise. Keep in mind there are fees involved so they don't provide "free" money. In some cases, they also provide ongoing guidance, plus your "crowd" is a great source of input and feedback. These sites are probably not going to win the praise of established VCs, but then again, most of us - and most of our projects - don't need that level and type of funding.
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0 votes
I think in this context Mark is referring to crowdfunding like angellist not kickstarter - which doesn't explicitly solicit investments but money for a product (ie not equity involvement.)
