With companies like Fundrise and EquityEats, D.C.’s got its share of crowdfunding innovators taking advantage of the shifting policy landscape. But just a few years ago, raising money from hundreds and thousands of potential future customers was no obvious feat.
In this month’s Technical.ly Podcast, we’ll walk you back to the early days of crowdfunding, starting with ArtistShare for musicians in 2003, EquityNet for accredited investors in 2005 and Spot.us for journalists in 2008.
“Access to capital for entrepreneurs and makers is changing fast. So the rules are changing too,” says Technical.ly cofounder Christopher Wink.
Then, we go over some tips and best practices for companies seeking to capture some capital by appealing to the crowd.
For instance, it’s not just about the initial cash flow, says Erin Glenn, the CEO of Quire (formerly Alphaworks). It’s also about increasing leverage with VCs. With the availability of crowdfunding, “institutional investors will be motivated to make faster decisions and commitments,” she notes.
There are also ways to combat the inherent riskiness of allowing anyone with an internet connection to make investments. “You can never mitigate risk but you can certainly create transparency,” says Glenn. “You can also ensure that someone who does this for a living is looking out for your best interests today and down the road.”