In the recent HBR article "The Crowdfunding Road to Hell," Daniel Isenberg argues persuasively that crowdfunding — specifically equity crowdfunding — cannot work.
As an entrepreneur, angel investor, VC, philanthropist, and CEO with 40 years' experience, I cannot agree.
From my experience investing in emerging start-ups (I'm invested in 60 right now) and launching my share of both failures (4) and highly successful (3) companies, I can attest that Mr. Isenberg is perfectly correct in his assertion that it's dangerous to expect crowdfunding of equities to work the same way crowdfunded donations do. Furthermore, I understand all too keenly the complexities of determining a fair valuation for companies that are too early in their development to fit existing measurement standards and can't meet the criteria for standard bank or SBA funding. I also agree that due diligence is an imperative — and is often overlooked by crowdfunders as impractical or overly complex. And finally, I concur that a crowd mentality can frequently encourage those who invest to be stupid.
To read the full, original article click on this link: Don't Abandon Crowdfunding -- Manage It - Alan E. Hall - Harvard Business Review
