“It’s a way to access capital, but what it’s also become is a market-testing and validation platform,” Ringelmann told the Dent the Future conference on Tuesday. “What we’re doing is creating pre-markets for ideas,” she said.
This makes sense to me. If I think of crowdfunding as angel investing, it holds no appeal to me at all. Angel investing by qualified investors is a dangerous game. Unless you are a whip-smart business lawyer, you can easily get hosed when the next investment round starts. I can’t imagine ordinary civilians making a profit at it.
But I am a very strong believer in test-marketing products. I like the idea of asking “Would you pay for this if I developed it?”
Pointer from Tyler Cowen.
Oculus Rift crowdfunders might disagree. Crowdfunding is beginning to look like all the risk and little of the reward.
What risk? Have any Oculus backers failed to receive their promised backer rewards?
Ringelmann also argued that crowd-funding takes the initial winner-picking “gambling” stage out of venture capital and allows VCs to concentrate on “amplification.” (That said, crowd-sourced angel investing, where people get equity rather than perks/products, is on the way.)