Crowdfunding Critique: The Dark Side of Equity Crowdfunding

Many entrepreneurs are excited about the prospect of raising capital via crowd equity, courtesy of the JOBS act. Successful crowdfunding sites such as Kickstarter are already gearing up to broker the sale of your company’s equity, much like they have helped launch companies by pre-selling new product ideas. Soon, the drudgery of building a business plan and pitching your dreams to countless angels and venture capitalists will be replaced by a fresh pool of investors eager to rain money into the future Googles and Starbucks of the world.

That all sounds terrific. After all, entrepreneurs have been bootstrapping companies with family-and-friends investments long before venture capitalists or any other institutional investors emerged from the primordial ooze. In today’s world of social networks, we all have dramatically extended connections. Why not keep it all in the family?

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