Investors vs. Backers: Crowdfunding for Equity
Compared to many of the humble origins affiliated with campaigns on Kickstarter and Indiegogo, the newly launched crowdfunding platform Investable.vc seems almost too “suit and tie” for the internet. As an accredited equity platform based out of Hong Kong with minimum investments of USD $10,000 and an “invite-only” policy, it’s not exactly crowdfunding for the everyday person. Yet, in a market like Hong Kong where start-ups are still treated skeptically by investors, the site provides serious networking opportunities for fledgling tech start-ups in need of capital.
Is it that different than the crowdfunding we use in North America? Yes and no. The companies and projects using Investable all have to be vetted and accepted by the host platform, which until last week was also true of Kickstarter. However the site has decidedly made itself extremely exclusive, calling itself a “curated” and accepting less than 10% of applicants.
Investable connects the target market with the product, nothing new there– only that with Investable the demographic makes significantly more money. All platforms effectively support good ideas, be they an entertainment system for dogs or a hardware startup that makes wearable tech for the elderly.
But here’s the big difference: hence it’s name, Investable offers equity to backers or truly, investors. Crowdfunding platforms like Kickstarter don’t offer this. Backers give a dollar in exchange for the opportunity to be part of something in a more abstract way but nothing equivalent to buying stocks. Although Investable allows for funding to occur at any stage in a start-ups growth, for a $10,000 pledge tote bags don’t seem like a proper exchange. Here, the giving incentives are investments.
Could crowdfunding for investment happen at home? For the United States it gets tricky for many reasons, legal issues being just one. For many creative projects, trouble could arise with multiple investors Filmmakers don't like having as many as three equitable investors holding the reins on their creative visions; imagine 500! I think part of the reason crowdfunding here in the states has taken off is precisely because we don't need to offer equity. Here, protected under the JOBS act startups have room to grow without risk.
Investable may be a catalyst for tech growth in Asia but here it seems like the yuppie brother of the more “bohemian” and grass root platforms we've come to love.
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