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0 pointschernevik14y ago0 comments

Fraud is _the_ concern. It isn't hard to imagine a crowdfunding bucket shop flacking shell companies to clueless investors who think they're buying a piece of the future. You can't fit much due diligence expense into a $2mm funding round.

I'd also worry about crappy documentation / followthrough. What's to stop management teams from using such ventures to roadtest ideas and architecture and fit, "fail", then launch for real without the crowdfunders?

Nor need we go even that far. What about cronyisms in investment recommendation, management hiring, consultant hiring?

You or I might be able to assess the network reputation of various players and intermediaries. But there are a ton of investors who can't spell 'DNS' and lack the self-knowledge to know they can't.

I'm as anti-regulatory as anyone I've seen on this forum, but this to me looks like trouble. I'm sure you mean well, it _sounds_ like a good idea. But if you imagine the broader universe of potential funders and funded, you may begin to see the problems.

0 comments

lukifer14y ago

How is it that Kickstarter has managed to stay mostly free of fraud? What's to stop someone from raising $50k with a slick video and then disappearing?

Crowd funding is a good idea, but Kickstarter has the generally right approach: small amounts, framed as donations rather than investments, and reward(s) rather than an ownership stake.

chernevikOP14y ago

I don't know anything about Kickstarter. But:

has ks been around long enough to attract / surface fraud?

incentives for fraud go up at stakes of 1 - 2mm

public investment models anticipate social disconnection bw funder and funder -- if ks depends on verification through social network linkage, that's an element potentially missing from the proposal. again, not for _you_, for the sort of people targetted by predators

zapnap14y ago

I'm worried about the same things that you are worried about. They are legitimate concerns, and they need to be addressed. No one is saying they are unimportant. This legislation is a vehicle for addressing them. This is also why I personally believe that the extra protections found in the Senate version of the bill actually make it more relevant than the loosely-worded HR2930.

No one is saying that regulation isn't important. And I didn't blindly throw my support into this without doing my research. I don't want to see individuals get into things they don't understand, but I do want people (who are properly educated and who understand the risks) to be able to make up their own minds, support their neighbors, and help bring new ideas to life.

chernevikOP14y ago

Okay, maybe you don't mean to, but this sounds a little talky-pointy to me. Who's against allowing people to make up their own minds and bring new ideas to life? Most of the people I know who talk that way live on K Street.

If you want to avoid sounding like a lobbyist, address the heart of what someone is saying. Who denied you think regs are important?

The point was that effective regulation is very likely _impossible_ at a cost consistent with the scale available at these funding levels. How do we regulate a bunch of these things, from a variety of sources, inside the budgets available to them? I don't see it.

j / k navigate · click thread line to collapse

0 pointschernevik14y ago0 comments

Nor need we go even that far. What about cronyisms in investment recommendation, management hiring, consultant hiring?

You or I might be able to assess the network reputation of various players and intermediaries. But there are a ton of investors who can't spell 'DNS' and lack the self-knowledge to know they can't.

0 comments

lukifer14y ago

How is it that Kickstarter has managed to stay mostly free of fraud? What's to stop someone from raising $50k with a slick video and then disappearing?

Crowd funding is a good idea, but Kickstarter has the generally right approach: small amounts, framed as donations rather than investments, and reward(s) rather than an ownership stake.

chernevikOP14y ago

I don't know anything about Kickstarter. But:

has ks been around long enough to attract / surface fraud?

incentives for fraud go up at stakes of 1 - 2mm

zapnap14y ago

chernevikOP14y ago

If you want to avoid sounding like a lobbyist, address the heart of what someone is saying. Who denied you think regs are important?

j / k navigate · click thread line to collapse