A cautious warning to those looking at ‘investing’ in projects through crowdfunding platforms: read a platform’s terms of use, e.g. Kickstarter.
1. The legal system has (almost) always played catch-up: crowdfunding projects effectively obtain equity financing with debt like benefits while they negate the debt like drawbacks, i.e. “There’s no accountability.” Furthermore, when consumers are faced with intertemporal decisions, crowdfunding projects pose as a dangerous bloodsucker to their savings capacity.
2. There ain’t no such thing as a free lunch: paying discount prices for potentially disruptive innovation comes at a price. If you are willing to fork out $250 for a commercial-quality home espresso machine, which typically run at US$8,000+, a $250 ‘investment’ should be viewed skeptically.
3. If there exists an opportunity, an arbitrage-like opportunity, there will always be those who take advantage of the system. Although the article states that ZPM is looking for a purchaser to deliver the original orders to its original backers, Polyakov remains skeptical.
So the question remains, will equity crowdfunding prevail for much longer? Or will some form of accountability be established through more formal debt-like syndicates.
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