FundingPost held its Summer Angel & Venture Event at The Soho Loft recently to discuss crowdfunding and the JOBS Act. A panel talked about what the new bill means to angels and VCs, and how entrepreneurs can take advantage of it to grow their businesses. The premise is that angels and VCs can go hand in hand with crowdfunding sources. Basically, if investors see that a startup is raising money, it stirs their interest. When asked if angel investing will stop after this new crowdfunding source, Joe Rubin, founding member of ARC Angel Fund and director of Funding Post said, “Definitely not. I think that there will be a lot of companies that will be able to use crowdfunding to their advantage, especially those that weren’t able to use angel investing and venture capital before.
“I think it’s a new thing that is certainly not going to be for everyone — nothing ever is. But I think that there are going to be a lot of companies that all of a sudden are going to be able to gain access to capital that maybe couldn’t get it before. I think that once some of these deals get funded by crowdfunding, the angels and VCs will certainly give those companies a look — once they actually see that they raised a lot of money from that and are doing well.”
Panelist Jed Cohen is co-founder & COO of RocketHub, a funding machine that is an international and open community that has helped thousands of artists, scientists, entrepreneurs and philanthropists raise millions of dollars. He sees crowdfunding as more than just a way to make money – he believes that it’s a great way to get feedback on new products.
“We’ve heard a lot of talk about smart money and dumb money — I’d like to think of these new crowdfund investors as a different kind of smart money, a whole different kind of intelligence. Imagine for a moment that you have the opportunity to have your consumers as direct investors.” He used the example of a high-end electric motorcycle company. Instead of going directly to angel or venture capital investors, the creator of the motorcycle company now has the opportunity to solicit people who are recognizable in the space of racing motorcycles. “So then these people end up riding my motorcycles and talking about my motorcycles,” he explained. “They give me feedback on my product saying, ‘Hey you know what would really help is if the bike was 10 lbs. heavier’ – or whatever it is. Getting educated consumers as advisors and investors is actually very valuable.”
He also wanted to remind the attendees that up to 90% of all startups never seek angel or venture capital investment.