The positions of crowd funding idea used by many start-ups all over the world to receive initial funds to begin their performance seem to be heavily undermined. The whole story began after negotiations between Oculus VR and Facebook resulted in a $2 billion deal and a promising hi-tech company became an ownership of the immense social network.
A campaign launched on Kickstarter helped attract $2.4 million. The ordinary participants after the deal received nothing, although the founders enjoyed huge benefits.
The acquisition caused a wave of disappointment as well as hostile remarks on the basis of which some arguments were put forward to make amendments to the laws aimed at imposing restrictions on the sale of equity stakes to small investors.
Slava Rubin who established a crowd-funding website Indiegogo and now is its CEO considers such laws are a good intention indeed and will definitely improve in the future. He is convinced they have a potential to democratize access to capital for technological start-ups.
Present legislation and a so-called JOBS Act already forbids private firms to sell stakes to the investors who have less than $1 million in assets and $200,000 in income.
Though necessary legislation changes can really facilitate access to capital, another issue emerges. Inexperienced investors can lose a lot if not everything because for many reasons a great deal of start-ups go bankrupt before achieving any success. After all there are some cases of fraud.
Slava Rubin recommends people to learn how to distinguish between a real fraud and failure. As an example he tells about his creation, Indiegogo, that has never had a sign of fraud during its existence.
Wayne Mulligan predicted legislation changes in this direction and established an organization aimed at providing investors with a needed information and additional training.
The very concept is to create a place where investors can meet together prior to making a final investment decision. Mulligan hopes his company will turn into a most credible platform for crowdfund investors.
We’ll surely yet see the legislation changes and sincerely hope that it will be altered to harmonize the interests of all participating parties in the most efficient way.