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Entrepreneurs: Crowdsourcing Your Funding Options

by Miki Saxon

http://www.flickr.com/photos/cambodia4kidsorg/5263812953/The traditional sources of seed funding are savings, credit cards and friends/family; now crowdfunding has been added to the list.

Recently I suggested Kickstarter to a founder, but he rejected it out-of-hand.

I was surprised, because both his idea and funding requirements seemed made for that solution.

But it was his reason for dismissing it that really blew me away; he believed it wasn’t a “professional solution” and would diminish the success/value/ of his company.

His attitude was even more surprising, since he is in his mid-twenties. I asked him why he felt that way and he said he frequently turned to more experienced people when considering business decisions, especially financial.

He said there were several financial executives among this group and that is who he queried. All held or had held senior financial positions in Fortune 500 companies and they agreed that having crowdfunding in the company’s history might make it difficult to go IPO. An additional two, who are lawyers, warned him that the law hadn’t caught up with the world and that crowdfunding might blur ownership in the event of an acquisition.

Listening to him, Monday’s post about the embrace of peer pressure to the point that opinions on everything are open to review and need to match what is considered “correct” as dictated by social media took on a whole new meaning and pointed out a glaring problem.

To which crowd do you listen?

Flickr image credit: Cambodia4kids.org Beth Kanter

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