Saturday, August 23, 2014
The SEC is in the process of crafting rules to facilitate crowdfunding of unregistered securities offerings. There's been a lot of back and forth about the merits of this idea - Michael Dorff, for example, has argued that it's a sucker's game, because the only businesses that will require crowdfunding are those too toxic for angel investors to touch. Meanwhile, Steve Bradford just posted about a study suggesting that the "crowd" is better at identifying winning business ideas than individual investors - even the professionals.
One idea that's been floated, however, is that crowdfunding will open doors for disadvantaged groups - like women.
Indiegogo, a crowdfunding website, recently boasted that women founders reach their target funding in much greater numbers than do women who seek startup capital through traditional means. Women have had similar results on Kickstarter.
There's been a lot written recently about how women fare poorly in the tech world when they seek startup funding. Women report navigating a lot of pretty toxic sexism from the mostly-male angel investors with whom they must negotiate.
I have my doubts about the viability of crowdfunding, but I'll be interested to see whether it can also level playing fields in unexpected ways.