Thoughts on Startup Crowdfunding

David Cummings on Startups

Earlier today I was at the Southern Capital Forum on a panel about early stage investing and crowdfunding. Based on the JOBS Act passed last year, soon non-accredited investors will be able to invest in startups. There are a number of unknowns about how the law will actually be implemented as well as how it will affect the fundraising market.

Here are a few ideas from today’s panel:

  • For tech startups that are difficult to understand, crowdfunding likely won’t do too much
  • For tech startups and consumer-oriented startups with a good marketing story, crowdfunding will provide another market validation option (e.g. crowdfunding could be a precursor to an angel round or replace angel rounds)
  • Standard deal considerations that are applicable to an angel round are also applicable to crowdfunding (e.g. having everyone invest via a single LLC, making the terms fair and consistent with the market so that the startup…

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