Why Equity Crowdfunding Isn’t a Threat to Venture Capital

Here’s a blog post from Entrepreneur.com that discusses the same issues that I touched on in my recent post: Why Equity Crowdfunding Isn’t a Threat to Venture Capital | Entrepreneur.com.

The JOBS Act has effectively loosened restrictions on equity-based investing in startups via crowdsoucing, but will this take the place of Venture Capital? This blog post says no – the author argues that crowdfunding will serve as a complement to VC in that friends and family can also contribute to startups in an easy way.

I tend to agree with his view, except for the outliers; what about the big ideas enabled by crowdsourcing that aren’t obvious or compelling to VCs? Think ‘Pebble Watch’, which is still the most successful Kickstarter project in history. No question, those big ideas are very rare – but when such ideas do come along and the entrepreneurs can’t or won’t seek VC funding, crowdfuning is another tool in their toolkit.

What do you think? Please comment with your views on the future of startups enabled by crowdfunding.

-Chris Kluesener, Open Innovation Central

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