Liam and Peter have a post up on the Nesta Impact Investment blog asking whether crowdfunding can work for social ventures. It’s a very good explanation of the issues you might face if you’re thinking about doing it.
We’ve just watched Fairphone do incredibly well by using crowdfunding for pre-sales but I have to admit I’m a bit sceptical about equity crowdfunding at the moment. Ownership is a about much more than raising money. When you’re very early stage you need a very trusting relationship with your investors — one that can’t really be codified in legal speak or a set of terms and conditions — and I worry that’s difficult if you have a large group of investors with different motivations for backing you.
Having said that I don’t have direct experience of a startup that has done it yet — maybe my opinion will change if I get the chance to see how it really works.
- How has crowdfunding changed the venture capital landscape? (medcitynews.com)
- FundAmerica CEO: Crowdfunding Is ‘Bigger Than the Internet’ (blogs.wsj.com)
- Crowdfunding vs. seed funding: All money is not created equal (venturebeat.com)