I ended up submitting or helping submit three different proposals for SXSW panels. One of the ones I am most excited about is a panel on crowd funding.
This panel is being led by my good friend, Fred Bryant. Fred has a company, Wealthforge, that is developing an industry leading standard for the crowd funding of startups that is not only straightforward and easy to use, but that is also LEGAL in the United States.
Our preliminary SXSW pitch has the same title as this blog post and read as follows:
Crowd funding sounds pretty awesome. You give entrepreneurs access to a huge new capital source and investors can diversify with minimal transaction costs. Just imagine the innovation that this would create. Who doesn't want to help people pursue their entrepreneurial dreams? As we all know there is money to be made by investing in them as well. Think of it this way, wouldn't it have been nice to purchase a few shares of a little company named Twitter back in July of 2006?
The internet has changed just about everything in the world over the last 15 years. That is with the exception of raising seed capital, most people are still stuck asking their rich uncle for $50,000 (whether they like him or not). Of course there are a few brave souls trying to change this, but it is more like a James Bond movie than a business venture. The US has arcane rules regarding private placements that haven't changed much since they were written; in 1933 (in case the SEC hasn't noticed the world is a little different nearly a century later). These rules and regulations have made crowd funding in the US pretty much impossible. But, as we have all found out over the years, just because the SEC is not a fan of something, doesn't mean it won't happen.
Regulation is not the only issue facing this industry. So far nobody has been able to prove the model. Many companies throughout the world are trying to solve these problems but they are all still looking for the answer. The only thing that you can be assured of is that some form of crowd funding will revolutionize the long stagnant pattern that entrepreneurs follow to raise capital. Come hear our diverse panel discuss this and give your input on what the future holds.
We'll see how much this changes once the SXSW folks go to work on it.
Anyway, Fred's business is currently in a very early alpha release. If you are interested in participating, please shoot me an email and I will get you an invite. Also, for some additional great resources on crowd sourcing equity and the related obstacles, check out this fantastic Slideshare from Kevin Lawton