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.
