Companies across the United States, for the first time since 1933, will be able to seek investments from ordinary Americans without having to go through the expense and rigor of a full-public stock offering.

Richard Swart

Categorized in : U.S.

Investors in all early stage securities know that bad news always comes before the good, meaning that firms who go out of business tend to do so faster than the firms that have exit events and provide returns to investors, if investors are educated about investing in early stage companies, and have diversified their investments, they can and should ride out the inevitable failure of some firms. However, most investors fear loss more than they appreciate gains and it will take time for the market to learn what the cycle of returns looks like for this form of equity crowdfunding investing.

Firms who have been successful in other forms of crowdfunding might well explore whether these options make sense for them.

Entrepreneurs need to understand that they cannot discuss the specifics of their crowdfunding campaign through social media. Most don’t understand this distinction. While all other forms of crowdfunding piggyback on social media -- this one does not, they are specifically forbidden from hyping or promoting any detail of the offering aside from communication to investor on the intermediary platform.

Indiegogo had good global reach and could better amplify our product and brand compared with the more niche tech [platforms].

Corporations are realizing there is a lot of social engagement on crowdfunding platforms that can drive corporate innovation and offer alternatives to focus groups.