Crowdfunding is Great, But There Are Some Kinks to Iron Out

Several weeks ago I wrote a post celebrating the crowdfunding phenomenon and its positive implications for the innovators out there who are dreaming up tomorrow’s app-development programs, portable solar power stations, 360-degree panoramic film lenses and even wearable Internet connectivity devices.

While I’m definitely very enthused about this democratized form of startup funding, the following VentureBeat article – and its chronicles of Kickstarter projects gone astray – got me thinking about how the very traits that make crowdfunding an equalizer can also lead to fly-by-the-seat-of-their-pants mishaps. Case in point: the problematic jellyfish aquarium that somehow ended up dashing the very creatures it wished to display against the rocks. Combining the hard-to-keep jellies with a haphazard plan for delivering a finished product to funders, I’m afraid these entrepreneurs bit off more than they could chew. No amount of crowdfunding can make up for a lack of business acumen or plain old simple common sense.

To further my point, a recent Wall Street Journal article The Good, The Bad and The Crowdfunded  highlights some of the massive successes and failures from the crowdfunding king, Kickstarter.

Regardless of these highs and lows, is definitely a trend to watch, with the potential to open up all sorts of opportunities both for entrepreneurs and investors.  Just look at all the TED discussions on the topic or at this venture, Fundrise, which aims to simplify putting money into real estate. The Washington, DC food-and-fashion market concept of Maketto, which is being financed through Fundrise, seems like the kind of niche business that could really catch on in a bigger way if crowdfunding finds its place in our economy.

Something tells me it will, kinks or not.