The Corliss Group Latest
Tech Review – The concept of crowd funding new technology companies
took a hit earlier this year when Oculus was bought by Facebook
FB for about $2 billion.
Participants in a $2.4 million
Kickstarter campaign that helped fund Oculus and its development of a virtual
reality headset, wound up with nothing to show for their support, while the
founders and early investors scored astronomical gains.
In the wake of the bitterness
over the deal, there are movements to change laws that limit the sale of equity
stakes to small investors.
Slava Rubin, CEO and founder
of crowd-funding platform Indiegogo, says
that eventually those laws, including the so-called JOBS Act, will evolve in a
positive way.
“It’s about access to capital.
It will democratize investing,” he told MarketWatch at the Nantucket Conference
in Massachusetts, a gathering for tech entrepreneurs and others recently.
Current laws, including the
JOBS Act, prevent private companies from selling shares to unqualified
investors, those with less than $1 million in assets and $200,000 income.
While changes in the laws
would open access to capital for startups, regulators argue that
unsophisticated investors in such companies could easily lose their shirts.
After all, such equity tends to be highly illiquid, and many startups fail. In addition there are concerns over fraud.
Rubin said that people should
differentiate between fraud
and failure. “Since its launch, Indiegogo has not had a single case of fraud.
But failure is not a fraud, and that happens,” he said.
Anticipating such changes in
laws that limit small investor equity stakes, Wayne Mulligan founded
Crowdability.com, a company with the purpose of educating retail investors.
“We aim to be the place an
investor visits before making an investment decision,” Mulligan wrote on the
company’s blog post. “Morningstar has done a great job building a place like
this for mutual-fund investors. Our goal is to build the most trusted place for
equity crowdfund investors”
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