4 ms·
Worse than even the expected "Cringely level" of analysis. Bubbles (despite appearances) aren't pushed by inputs; they're pulled by expectation of outputs. Th
by rlucas 14y ago
Worse than even the expected "Cringely level" of analysis. Bubbles (despite appearances) aren't pushed by inputs; they're pulled by expectation of outputs. That's why, roughly, the pace of VC dollar inputs is a lagged dependent variable on recent M&A and IPO volumes.
(If you don't believe me check out the MoneyTree historicals at https://www.pwcmoneytree.com/MTPublic/ns/nav.jsp?page=historical https://www.pwcmoneytree.com/MTPublic/ns/nav.jsp?page=histor... Notice that the deal volume roughly matches a 1-2 quarter lag on the stock market's performance.)
Crowdfunding has no exit mechanism. There will be no bubble because there's no "pull" effect.
The critique "derefr" provides below is more apt. There will be fraudsters who will try to prey on the fact that nobody can afford to do much diligence on a $1000 investment.
- TheCowboy 14y agoThere are expectations that these projects actually deliver their stated goals, including the 'rewards', when they receive the requested funding. It's still a new experiment overall that can be innovated upon, but it's not immune to a crash in people willing to throw their money at random pet projects. Even if the reality is that most projects deliver, having enough bad apples or outright frauds can be enough to hurt progress. I read a recent piece talking about how many game projects seem to terribly underestimate the amount of money required to fund a game. Enough people who are terrible at estimating their financial needs can also hurt everyone. It's not like this problem can't be solved, but it shouldn't be ignored if you want crowdfunding to succeed.