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Ask HN: Crowd funding with equity, good or bad idea?
4 points by gavanwoolery 1411 days ago | hide | past | web | 1 comment | favorite
I am curious to know everyone's thoughts on equity-based crowd-funding. In traditional crowd-funding platforms (such as Kickstarter), users do not get equity from their investment (their only potential return is the product/related swag). The reason equity is not offered is because it is currently illegal to sell equity without being an accredited investor in the US, however very soon it may be legal. See:


I know I would personally love to be able to give something more back than just a product, but I am aware of the danger/complications of selling securities with little governance. Also most VCs (perhaps rightfully) are not very interested in investing in the risky kinds of products that I would enjoy working on, but I feel if the risk were heavily distributed people might be more confident in investing.

What are your thoughts on this?

Equity gives shareholders legal rights and creates an opportunity for mischief. A well funded competitor could tie your company up in court for a few dollars via something as simple as alleging a fraudulent practice.

Unlike professional investors, lay persons tend to have wildly unrealistic expectations about the return from a small equity stake in a business.

To me, the burden of managing small unsophisticated shareholders - and lots of them - is likely to take more energy than it is worth.

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