The Venture Edge

Crowdfunding through sites like Kickstarter.com and Indiegogo.com has been all the rage lately, but I have long suspected that the excitement (and the hype) has overtaken the reality. If you poke around these sites, you'll see some remarkable examples of companies doing extremely well pursuing their crowdfunding dreams. But look past those few examples which tend to be prominently displayed for all to see, and you'll find that the vast majority of these crowdfunding efforts don't do much at all. 

Can you believe it’s been nearly a year since the President signed the American Jobs Act designed to jumpstart startups by giving entrepreneurs access to money from average citizens in exchange for equity in their companies? Meanwhile, because of the inaction of the SEC, nothing has happened.

Don’t you just love hype cycles, aka bubbles?  I do because they’re so predictable and yet we all go along for the ride.  What's funny is that you can see them coming, but they’re hard to resist because the excitement that surrounds them is so palpable.  Even if we realize that  all bubbles eventually pop, we still seem taken by surprise when they do.  The dot com boom, energy, and the rise in housing prices (I’ll admit that one lasted a long time) to name a few recent ones that made a lot of people rich and then took it all away.

I have been a fan of the Kickstarter crowdfunding platform for some time -- it seems to me to be a great way for entrepreneurs with good product ideas to raise the funding they need to get their ideas off the ground. However, while crowdfunding holds great potential for entrepreneurs, the appeal to date is I'm sure limited by the amount of money that platforms such as Kickstarter have actually generated for their clients. A quick look at the Kickstarter "Discover Projects" page, for example, shows several projects hovering at just a few thousand dollars, with some under $1,000.