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Is Equity Crowdfunding an Oxymoron

While people wait for the SEC to implement rules for equity crowdfunding authorized under the JOBS Act of 2012, many companies are racing forward with project based crowding. Research just published in an Amazon Kindle book “Is Equity Crowdfunding an Oxymoron” indicated that entrepreneurs with some prior track record are much better off raising capital via rewards based crowdfunding than trying to attract venture capital. Besides not giving up ownership the campaigners can raise the money more rapidly than going the venture capital route. Crowdfunders with the most success are developers who already have a product on the market. The Veronica Mars campaign on KickStarter raised $5.7 million from a fan base estimated at 2 million. Many venture capital firms also require a company to have some prior sales before considering funding a venture. In fairness to VCs, they provide a lot more than just money to the ventures they back, and the book examines these services. Equity crowdfunding is already underway in the UK. Early results at Crowcube.com indicate that the average amount raised is about a quarter of a million dollars. The top business categories for companies that have been funded are; retail, food and drink, and professional […]

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