crowdfunding and the JOBS Act

In the last couple of days, I’ve been researching about crowdfunding and related internet sites. Kickstarter, IndieGogo, CrowdCube and Seedmatch, all very exciting platforms. Kickstarter and IndieGogo raise funds for small, creative projects mostly. Although IndieGogo is not so strict on letting just creatives raise funds there; as seen by Nicholas Merril – raising 43k$ in just one day for his privacy-protective ISP.

CrowdCube and Seedmatch (Germany) raise capital for business ventures mostly. Seedmatch only has one active project at this moment, and at CrowdCube I noticed a large gap between some (6-8) fully funded projects and active projects that had 46% funding – max. That made me wonder if it’s really taking hold in the UK as a viable platform that attracts investors in the first place. Maybe the completed projects brought their own investors to CrowdCube, and just used it instead of a traditional investment bank, that wouldn’t have bothered with small amounts like that.

The House of Representatives in D.C. recently passed the JOBS Act or crowdfunding act, opening up regulation of who is allowed to invest in small startups. A domain that was closed to the public until now, potentially creating a multi-billion dollar investment market.

The pivotal point here is trust. How can Joe Doe, investor, be confident his investments aren’t just complete rip-offs? This question will no doubt get flaunted by banks and investment outfits (it’s already happening) fearing for their fund-dollars. But then, how can I be shure the money manager in my fund does well? Especially in times like these?

I personally think that whoever can create an environment of trust, that attracts masses of investors, has a goldmine on his hands.

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