With crowdfunding legal in some states and taking place virtually everywhere, the spectrum has narrowed. It is plain to see how the movement is playing out in the immediate future. To start, crowdfunding is not a game changer. At most it is a tool used for offering equity, debt, preselling goods, production funds, and gifts. Kickstarter has proven the possibility of bringing people together to fund projects. However, that is much different in comparison to offering debt and equity.
In my opinion, the equity/ debt portion ( which is legal in the state of Georgia) forces those involved to rise to a certain professional level. That is the Catch 22 — only about 1-2 percent of ventures make it to the VC level — so I would have to guestimate that most crowdfunding businesses will not succeed, primarily due to the natural topography of business and management skills.
If you are savvy enough, do a DPO (direct public offering) in a favorable jurisdiction. Use AngleList. Why not utilize the IGE (Invest Georgia Exemption) if you are in Georgia? Regardless, these new investment laws are really resurrected laws that were standard early last century, but investors and non-investors alike were ripped off left and right. To execute successfully today, investors will need investor relations and many company owners will not be able to field the flurry. This is the beginning of top level enterprise, crowdfunding is – in theory – the new angel investor.
One of the most important tools an entrepreneur can have is the ability to pivot and adapt. Those who cannot will not survive or prosper at the levels they strive for. Gone are the days of the hardheaded startup guru. These are the days of creative finance and entrepreneurs need to step it up to the next level.