Donnerstag, 11. April 2013

Concerns On Crowdfunding

In other words, odds are that typical crowdfunding investment returns won't even reach venture capital's mediocre heights. And, if that proves out, why are investors going to keep investing? Remember, equity-based crowdfunding is different than Kickstarter. The only tangible return here is money, not a trendy watch.

But if the average person generates lower returns from their crowdfunding portfolio than from their 401(k) or personal stock portfolio, why would they allocate future dollars to the former? When traditional VC firms raise funds, they commit to a large portfolio and a long-term time horizon. Individuals don't necessarily do the same.

The only counter-argument I've heard is that crowdfunding is just as much about supporting worthy startups as it is about ROI. Maybe because the company is local, or the investor agrees with its broader social mission. View The Full Text by Dan Primack on CNN Money.