In preparation for a lecture on crowdfunding to a group of accountants, I discovered from my research of that the concept of having many people invest a small amount of money into a company, is more myth than fact. Sophisticated investors are unlikely to forward $1000 on their PayPal account simply because you have a good idea. At best, crowdfunding sites are simply a platform for companies to find investors or venture capital companies and for entrepreneurs to advertise their need for funding. Those successful in raising funds via crowdfunding sites appear to a have attracted a few large investors, not many small investors, as the crowdfunding concept suggests. True crowdfunding may be effective for raising funds for a charity or for selling a product, but the reality is that it is back to the basics in terms of raising capital.
On Thursday, I’ll share a new blog about the top 10 mistakes entrepreneurs make when attempting to raise angel money.
Do you have any thoughts on crowdfunding? We welcome your comments.