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Crowd funding makes sense however when there is large consumer demand for a product deemed impossible or otherwise not desirable by major established players.

Crowd funding makes sense however when there is large consumer demand for a product deemed impossible or otherwise not desirable by major established players. Star Citizen is a great example of this as major publishers had no desire for a truly PC-centric next-gen space sim with very large worlds (4+ billion KM per face) and nested physics grids. Sure the end product is behind schedule but people backed it to break new ground, and that's exactly what it's doing. Something like SC would never be made under traditional funding models

tptacek 10y ago
Crowdfunding for products makes a lot of sense. But this article is about equity crowdfunding, which is crowdfunding not for presales of a product, but for return on investment. That makes substantially less sense.
- deleted 10y ago
  [deleted]
- jjeaff 10y ago
  Well if you say so, it must be true.
cocktailpeanuts 10y ago
I think you should use an example that actually ended up becoming successful in the long term (which is pretty rare). My observation with ANY type of crowdfunding campaigns is: because the founders has invested much less (both financially, socially, emotionally, etc.) in their projects, they tend to: 1. give up easily; 2. make bad decisions because they don't have much to lose 3. The fundraising is not really thought out, which results in most of them running out of money quickly and not meeting the deadlines. Imagine you're starting a company and instead of crowdfunding you decided to self-fund it until you get to product market fit. You would be extremely careful in projecting runway, and you would have done much more research before even jumping into the project. That's not the case with crowdfunding campaigns. Most crowdfunding projects are people who just throw up a web landing page with a video, hoping that it will go viral. Most of them don't even have any intention of building the thing if it doesn't go viral. This is why most campaigns are not well thought out and never make deadlines and most of them end up mediocre products, or better yet, not even ship. I can understand why there used to be regulations around this. I doubt anyone involved in these projects start out thinking they're going to con people, they start out with good intention but they bring down everyone along with them. Also because they think it's not that much of a deal for each investor (I mean, they only lose like $100 each, so what?) they can give up easily. Compare this to giving up on a company where you raised millions of dollars from your family, friends and institutional investors. You actually have responsibility to make something happen since it's not a matter of $100 investment each.

tptacek 10y ago

Crowdfunding for products makes a lot of sense. But this article is about equity crowdfunding, which is crowdfunding not for presales of a product, but for return on investment. That makes substantially less sense.

deleted 10y ago
[deleted]
jjeaff 10y ago
Well if you say so, it must be true.

cocktailpeanuts 10y ago

I think you should use an example that actually ended up becoming successful in the long term (which is pretty rare). My observation with ANY type of crowdfunding campaigns is: because the founders has invested much less (both financially, socially, emotionally, etc.) in their projects, they tend to: 1. give up easily; 2. make bad decisions because they don't have much to lose 3. The fundraising is not really thought out, which results in most of them running out of money quickly and not meeting the deadlines. Imagine you're starting a company and instead of crowdfunding you decided to self-fund it until you get to product market fit. You would be extremely careful in projecting runway, and you would have done much more research before even jumping into the project. That's not the case with crowdfunding campaigns. Most crowdfunding projects are people who just throw up a web landing page with a video, hoping that it will go viral. Most of them don't even have any intention of building the thing if it doesn't go viral. This is why most campaigns are not well thought out and never make deadlines and most of them end up mediocre products, or better yet, not even ship. I can understand why there used to be regulations around this. I doubt anyone involved in these projects start out thinking they're going to con people, they start out with good intention but they bring down everyone along with them. Also because they think it's not that much of a deal for each investor (I mean, they only lose like $100 each, so what?) they can give up easily. Compare this to giving up on a company where you raised millions of dollars from your family, friends and institutional investors. You actually have responsibility to make something happen since it's not a matter of $100 investment each.