Startup crowdfunding

Crowdfunding works best when the backers have special knowledge about the project that leads them to fund things that otherwise would have been overlooked or undervalued by traditional investors.

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When you look at the biggest crowdfunding markets – publicly traded stocks on NYSE, NASDAQ, etc – you find that a) In general, non-professional investors lose money when they try to pick individual stocks.

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Most successful seed investors will say that it is mostly about investing in great people, and it is very hard to evaluate people even after multiple in-person meetings. If founders are going to be evaluated online without in-person meetings, great care has to be taken to make sure the evaluation mechanisms are sufficiently nuanced and reliable.

via Some thoughts on startup crowdfunding – Chris Dixon.

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