Why Angels Should Keep Their Distance from Crowdfunding in 2014

Opinion

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its way into the mainstream venture investment community. However, I do feel that its current form leaves a lot to be desired for both investors and entrepreneurs. Moreover, there seems to be an oversupply of crowdfunding services coming online that reminds me of the “Dot Com” boom of the late 1990s. There are currently more than 1,000 that have filed for approval by the SEC.

One way to improve the situation would be for crowdfunding platforms to affiliate with an angel group that could lead the fund-raising effort. The angels would provide the needed screening and due diligence. However, it will take time to work out the exact nature of the relationship. So for now, I’m advising my fellow angel investors to watch how well this crowdfunding idea progresses, but only from the sidelines.

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Jeff Draa is the current president of the San Diego chapter of the Tech Coast Angels, the largest angel investment organization in the United States. Follow @

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2 responses to “Why Angels Should Keep Their Distance from Crowdfunding in 2014”

  1. Samuel S. Guzik says:

    Great analysis. Sadly, under the SEC proposed rules funding portals (non broker-dealers) will be prohibited from curating deals on the basis of subjective factors, such as quality of management.

  2. Sang Lee says:

    Interestingly enough angel investors are first movers that act on technologies and businesses that have not yet been completely vetted in terms of long term viability, but hold great longer term prospects. In addition to this there is obviously the aspect of believing the in the management and execution team.

    Having said that, crowdfunding could be a huge way to provide the technological leverage to reduce the significant amount of friction that exists within the startup capital markets today both on the startup as well as investor fronts. Additionally, the injection of additional with the collaboration or more sophisticated investors will become a huge mover for innovation and job creation.