Previously posted on Medium.
Is Crowdfunding “more human” than Venture Capital?
I don’t know, but obviously that’s crowdfunding companies’ attraction, the power of the crowd. It is undeniable that these companies give to the people what they want, the desire to participate, to be part of the revolution we are in. Every day we see how traditional companies are being bought by bigger ones of the same kind. It’s difficult getting to know the last owner of the brand of cereals you are used to buy. Is that bad? I’m going to tell you what’s worse: the brand placed next to the one you buy is probably owned by the same corporation. What am I trying to say?
Not only big corporations and rich people can invest. Now you can as well. Now you can help people to fulfill their dreams and to be part of them.
I agree, this sounds pretty cool, but will we all (small investors) get something in return thanks to crowdfunding? That depends on how far you want to go. Remember, helping people may be beautiful but in the end, crowdfunding is the same than venture capital: to invest money in risky businesses (seed and startup companies) in order to get high returns. Investing through crowdfunding platforms also depends on whether the government allows you to do so. I don’t know anything about other jurisdictions but Spain’s future Crowdfunging Act will make the subsistence difficult for these crowd investment platforms since the amount of money that can be raised is strictly limited (one million euro per project). Additionally there will be a limit of three thousands euro per person and project — six thousands euros per year for one person willing to invest in more than one project-). These restrictions will make the potential investors market smaller and as a consequence the revenue of crowdfunding companies, which is a percentage of the money raised (6 % in the case of @fundedbyme), will be lower.
My reasons to support crowdfunding
– Making someone’s idea become reality.
– To gain experience in order to start your own business.
– To democratize the economy.
Let’s do it. Let’s boost people.