Problem: Crowdsourcing-for-equity quickly will result in >500 investors. This requires a C-corportation (not an S or an LLC), and requires full SEC filings and regulation. This means the company will be going public with no product, customers, or otherwise.
Honestly, I think there's a role for a Kickstarter-like fund for startups (as opposed to Kickstarter's focus on creative projects). Still no equity--the "prizes" generally would be promises of receipt of future products. But without equity, there's none of the legal wrangling associated with going public.
For new companies, such an entity would give: 1) market validation based on the number of financial contributors, 2) market research based upon feedback of pre-sale customers, and 3) relatively strings-free funding. In fact, I thought heavily about announcing my current project on Kickstarter until I read their terms and conditions. I'd definitely be using it to fund a new company, and funding one that would be difficult to call "creative".
I wanted to point out that depending on how rulemaking goes in the SEC this is not necessarily true: the SEC is considering allowing all crowdfunding investors (people who have invested under the crowdfunding exemption in the JOBS act) to be bundled together into a single entity, thus easing the transition from crowdfunding to a Regulation D deal and possibly eliminating the need for a company to incorporate as a C corporation.
In addition full SEC filings are not required under the new crowdfunding exemption.
Honestly, I think there's a role for a Kickstarter-like fund for startups (as opposed to Kickstarter's focus on creative projects). Still no equity--the "prizes" generally would be promises of receipt of future products. But without equity, there's none of the legal wrangling associated with going public.
For new companies, such an entity would give: 1) market validation based on the number of financial contributors, 2) market research based upon feedback of pre-sale customers, and 3) relatively strings-free funding. In fact, I thought heavily about announcing my current project on Kickstarter until I read their terms and conditions. I'd definitely be using it to fund a new company, and funding one that would be difficult to call "creative".