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Crowdfunding-Res
12-17-2013, 07:46 PM
In your opinion, is crowdfunding gaining traction at a just right speed or perhaps a bit too slowly?

Reports indicate big leaps in market size between 2012 and 2013, but still could it have been more? If I remember well, FB and similar exploded really really fast among masses!
Nowadays FB got into a common parlance, if you ask anyone on the street, they've heard of FB. However, my impression is that awareness and interest of common people for crowdfunding is low. Many don't know the concept, not to mention names of 200+ platforms.
Tech geeks love innovative gadgets and Kickstarter, but even they seem a bit less enthusiastic about equity-based model.

Agree in your experience? Have you noticed other potential problems in the expansion of CF?

Cara@BloomVC
12-19-2013, 07:46 AM
Lack of awareness and even suspicion about crowdfunding is one of the biggest problems we face at Bloom VC. I think it's growing rapidly though - last year there were very few mentions of crowdfunding as compared to this year. We all need to work together to promote the various crowdfunding models so that people can make informed choices about funding routes.

Crowdfunding-Res
12-19-2013, 08:48 PM
Lack of awareness and even suspicion about crowdfunding is one of the biggest problems we face at Bloom VC. I think it's growing rapidly though - last year there were very few mentions of crowdfunding as compared to this year. We all need to work together to promote the various crowdfunding models so that people can make informed choices about funding routes.

Thanks. I guess you have also noticed that equity-crowdfunding is expanding particularly slow, lagging in market share compared to reward-based and debt-based model. Is it just because of regulation issues, or there might be something more there?

Is it likely to stay disintermediated or is it going to become just another medium for VCs and angels to scout for deals (and perhaps diversify)? Not quite sure about current participation of VCs, but seems logical they will jump in

Cara@BloomVC
12-20-2013, 07:32 AM
Equity crowdfunding does have particular issues and I think regulatory concerns are holding back the growth of that sector. Unfortunately the current FCA proposals would severely limit the potential of equity crowdfunding - so it all depends on how the FCA react to industry concerns.

SocialCam
12-22-2013, 09:57 AM
January should be a big month for equity crowdfunding in the US. The 90 Day Discussion period will end and the SEC should be able to finally put rules into effect soon after. We are finally beginning to get at least some clarity with things, and that will allow platforms waiting to take advantage of new rules, to finally move forward with some of their plans. I expect crowdfunding will see it's biggest growth yet in 2014.

Crowdfunding-Res
12-25-2013, 07:33 PM
Good to hear some bright forecasts. The problem is that the awareness with the general public about this phenomenon is still very low. How would you best promote crowdfunding as a concept? Some innovative ideas?
I mean, anyone today can open a platform and what happens is they get zero visitors. Credibility seems hard to get for both individual platforms and the industry as a whole. It's questionable even how much interest there is for the equity-based model in general public globally. Maybe a small group of (angel) investors will specialize in investing on these platforms and generate significant volumes to keep the growth rate solid, but without a true and massive democratization of capital formation?

p.s. Merry holidays to everyone!

Brandon
12-26-2013, 10:27 AM
I think the growth is a bit slow. After all, 5.1 Billion dollars raised last year is a small amount considering that new and pointless apps like SnapChat is valued in the billions already. Sorry SnapChat people. :) Anyways, the "equity effect" of crowdfunding is and I believe will continue to be diluted by the regulations. If you have not read the most current requirements please do. The hurdles you have to jump through is insane! Comparing crowdfunding to a FB is not exactly the correct perspective to take though. If the standard of success is FB then 99.9% of business or business structures are slow. The "Equity Effect", I may trademark that, will not impact small projects and small investors. Donation based crowdfunding will still account for the vast majority of crowdfunding for the foreseeable future.

How can this change or how can WE change crowdfunding? I think that we (everyone involved in crowdfunding) need to re-position the concept of crowdfunding. As opposed to being a separate business concept we have to "message" it into the greater start-up community. Right now its stuck in its own corner and treated like a quaint-ish funding process. The next is consolidate the platforms...there are too many for the average Joe or Jane to know about and they are not all different enough to stand out. Using your FB example think how different Twitter is from FB or Instagram...etc. All of them are social media platforms and all of them are different enough to stand out. Heck if you know what your doing they even compliment each other.

I am launching a site that will combine start-up and crowdfunding news, tip and current events on one site. The idea is that people love investing is start-ups and learning about them that's why the show Shark Tank (or Dragons Den for the Canadians in the crowd) is popular. We are launching at the first of January and truly have a passion for crowdfunding and the general start-up community. Sorry for the shameless plug. The point is we have to change how the general public views crowdfunding by weaving crowdfunding into the general start-up community. It can't (and shouldn't) be the red-headed step child.

Crowdfunding-Res
12-28-2013, 02:50 PM
I always wondered how basically a simple app can be valued at such huge amounts. We already had Instagram, not to mention many of Twitter's acquisitions, and now SnapChat?? :) I don't even see how they intend to monetize the model and justify such valuation in a meaningful timeframe

True, but what you think should it be positioned more alongside a startup community or perhaps business angel/VC community? After all, except for donations, crowdfunding is an entrepreneurial finance concept

I see that your site is still not online, but January is coming and we're all excited to see what is it about :) The shows you mentioned are also a form of entertainment, how do you plan to achieve that with "just" combining news feeds or providing a set of tips?

Regarding the (US) regulation, I'm not exactly an expert in this, but seems that according to CROWDFUND Act intermediaries such as portals face quite a bit of hurdles and obligations, while for investors (accredited vs non-accredited) the requirements are quite straightforward, no?

Salvador Briggman
12-28-2013, 09:51 PM
Have you noticed other potential problems in the expansion of CF?
- Anytime you are in an industry hampered by government oversight/regulation, it will naturally grow slower and people will use the ability to comply with government regulation (legal fees, accounting fees, etc) as a barrier to entry.

In your opinion, is crowdfunding gaining traction at a just right speed or perhaps a bit too slowly?
- I like the pace at which it is growing.

The problem is that the awareness with the general public about this phenomenon is still very low. How would you best promote crowdfunding as a concept? Some innovative ideas?

- Success stories will naturally promote crowdfunding (for creators). When success stories appear for investors, this will also naturally promote crowdfunding.

- In my opinion, it all comes down to benefits for individuals and organizations. There are benefits to raising money online, but also draw backs (time expenses/hard work). Education about the benefits and drawbacks will also help :). The question is how do you get established businesses involved? Establish businesses have employees, which would be forced to learn about crowdfunding should their company engage in it. If your goal is to spread awareness of crowdfunding, you can reach a lot of people this way, as opposed to going after startups.

Crowdfunding-Res
12-30-2013, 05:20 PM
Have you noticed other potential problems in the expansion of CF?
- Anytime you are in an industry hampered by government oversight/regulation, it will naturally grow slower and people will use the ability to comply with government regulation (legal fees, accounting fees, etc) as a barrier to entry.

In your opinion, is crowdfunding gaining traction at a just right speed or perhaps a bit too slowly?
- I like the pace at which it is growing.

The problem is that the awareness with the general public about this phenomenon is still very low. How would you best promote crowdfunding as a concept? Some innovative ideas?

- Success stories will naturally promote crowdfunding (for creators). When success stories appear for investors, this will also naturally promote crowdfunding.

- In my opinion, it all comes down to benefits for individuals and organizations. There are benefits to raising money online, but also draw backs (time expenses/hard work). Education about the benefits and drawbacks will also help :). The question is how do you get established businesses involved? Establish businesses have employees, which would be forced to learn about crowdfunding should their company engage in it. If your goal is to spread awareness of crowdfunding, you can reach a lot of people this way, as opposed to going after startups.

Some really good points.

In your opinion, further deregulation might be beneficial, despite potential risks? If I am not wrong, as per CROWDFUND Act even 1 billion $ business is now a 'small' (emerging-growth) company, disclosure requirements have been circumvented and audited financial statements are needed only for larger offerings. This is equity-model-wise, for the reward or donation (the most prominent models so far) the way is completely free...Seems like it's more burdensome for platforms than for investors or entrepreneurs to operate in this space, no? However, maybe there would be indeed some benefit in further deregulation.

In a sentiment-based research I am conducting here (https://unibocconi.qualtrics.com/SE/?SID=SV_ac3evLMJoHVbMt7) many participants actually voiced that they would prefer a more stringent regulation. Now it can be that the sample is still too small, however it comes as an interesting finding. You can take a look at the pool and you are very welcome to participate.

A few years ago trading and alternative investment such as forex and commodities were at their prime in a retail segment (i.e. average Joe). Many made only losses. Will that influence the appetite for this kind of risky investment within the non-accredited crowd? How many people are actually interested AT ALL in investing in anything, researching, ding diligence? Isn't it that people nowadays complain about having only debts and no time and resources to invest?

Btw I really like the part suggesting involvement of established businesses. P&G has been using crowdsourcing in their strategy for a long time with a lot of success. Well maybe multinationals aren't the best example since they usually don't need cash through crowdfunding, but perhaps they could participate in some other way.

Thanks for the feedback!

eyeofthecrowd
02-16-2014, 10:35 AM
It comes down to the need to develop an ecosystem that supports crowdfunding that consists of several pillars:

1. Education for Investors, Education for Businesses (Without the supply and demand, there will be no market.)

2. Service Providers, the industry is so new it will take some time to get all the appropriate service providers in place. Much more than just the portals or intermediaries. We are talking about attorneys, accountants, bookkeepers, due diligence companies, background check services, portfolio management services, the list is endless and I would like to see what else the CFF thinks is needed.

3. Admin nailed it with so we get people in the market and into an investment, but then what. There has to be some incentive for broker dealers to become market makers so that a secondary market can exist. There is a company called Orchard that is developing a secondary market for the debt crowdfunding side which is more mature, but nothing on the equity side yet, because there really is no market. 3.5 to 7 years to hold an investment is harder for the every man than a large institution.

4. We have to find a way to keep the costs down. A balance must be achieved between Investor protection and reasonable regulation of these new securities. Right now the SEC proposed rules create an environment in which the business model is unsustainable and quality companies will not go the way of equity crowdfunding.

5. The other thing that will take time is improving the ease of investing for the retail investor. These smaller investors will need to be able to invest easily through self-directed IRAs and other accounts. It will take a few years for the trustees to become comfortable with this asset class before that happens.

But alas:

"Here's to the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes... the ones who see things differently -- they're not fond of rules... You can quote them, disagree with them, glorify or vilify them, but the only thing you can't do is ignore them because they change things... they push the human race forward, and while some may see them as the crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do." Steve Jobs

CrowdFundFusion
02-21-2014, 11:02 PM
Really interesting thread and one that I may chime in on. I echo some sentiments here that equity crowdfunding might be responsible for somewhat slowing the possible interest in crowdfunding. When the possibility of equity crowdfunding appeared I thought that it would be the venue by which the average person on the street would finally here about crowdfunding. Alas, it looks like this niche will be that of the wealthy and 'accredited' investor for good or for bad.

However reading about other niches starting in areas like real estate shows that crowdfunding still has a lot of room to spread. I wish that I could look into a crystal ball and see the future of our industry but I will say that the future is bright and that growth will continue year after year.