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Gareth Everard has an interesting article on TechCrunch discussing what he believes crowdfunding will look like in the near future.
The golden age of irrational exuberance on Kickstarter has ended — Pebble is shutting down, marking the fall of crowdfunding's white knight after a string of other high-profile closures and failures.
Originally positioned as a medium for (especially arts-related) projects to garner modest seed funding from a diverse group of supporters, crowdfunding platforms like Kickstarter and Indiegogo have obviously evolved since their respective launches in 2009 and 2008. Yes, crowdfunding has produced some inspiring success stories that have grown into innovative businesses, like Peak Design and Flow Hive.
However, it also has facilitated the transfer of significant sums of money to teams that ultimately proved themselves to be incompetent, leaving backers with nothing. Recent headlines have been chock full of projects that have declared bankruptcy or otherwise betrayed their early backers, exposing cases where founders' and companies' egos have simply overtaken their ability to reason, plan and communicate logically or truthfully.
Have the high profile failures doomed crowdfunding?
(Score: 5, Insightful) by fadrian on Monday January 23 2017, @01:07PM
Most startups fail. This is true whether you fund them traditionally or online. Why is anyone surprised?
That is all.
(Score: 2) by Thexalon on Monday January 23 2017, @02:22PM
An interesting question would be the failure rate of crowdfunded ventures versus companies funded by vulture capitalists, and how those ventures failed.
For basic failure rate, I think we're looking at something like 99.5% versus 99.9%, but I'm not sure in which direction. But the more interesting question is how they fail: Did they:
(A) Fail to create their product?
(B) Discover the product didn't sell as well as they'd hoped?
(C) Fake the whole thing, and there never was a real chance of a product to begin with?
(D) Have some modest success, enough to make a profit but not enough to keep the investors happy or the owners paid enough to live on?
Particularly interesting would be how good a job the VCs versus the amateurs do at spotting the fraudsters. My suspicion is that the VCs are nowhere near as good as they think they are.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 2) by VLM on Monday January 23 2017, @02:59PM
There is additional aspect that VC are self-limited (why?) to exclusively funding young white frat boys from Stanford currently living in SV, so competing with "The entire world" its going to be impossible for the VC to keep up. I feel icky defending VCs now I need a shower.
There is an additional additional aspect that VC is more like gambling as a business model whereas kickstarter while not quite being Graham and Dodd level financial analysis they are at least somewhat more serious and business-like than VC style "pull the slot machine lever".
(Score: 3, Informative) by Thexalon on Monday January 23 2017, @03:25PM
There are VCs elsewhere, although sometimes they call themselves other names (e.g. "angel investors", which claim to be totally different from VCs but are actually just like VCs).
It still helps to be the VC's buddy from college, though.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.