Crowdfunding has the potential to fund many great new ideas, large and small. Regulators, however, are concerned with only one possibility, that small investors might lose their money -- which is likely in any start-up -- and then complain to elected officials. This attitude crushes the spirit of enterprise, and needs to be denounced at all opportunities by happy people who prefer prosperity.
How about this? Enact crowdfunding, and simply require an unqualified statement on every crowdfunding website page, in a large font, to wit:
CROWDFUNDED BUSINESSES ARE BY THEIR NATURE VERY RISKY, AND YOU WILL PROBABLY LOSE MOST OR ALL OF YOUR INVESTMENT.
Or don't single out crowdfunding in particular; this advice is valid for all investments. Say, instead, "Startups usually fail. Don't invest more than you can afford to lose all of."
ReplyDeleteThe cynic in me want to take a different tack, though: "Are you investor enough to take on this project? Well, are you?"
Eric Hines
True, but it seems to me that crowdfunded projects are particularly risky because there is not necessarily a big lead investor to go to the expense and trouble of deep due diligence. In other sorts of funding transactions, most investors can at least free ride off of some institution's work.
ReplyDelete