The main thing crowd-funding has over big investors is that rather than having to predict what the mob will be interested in, the mob can be part of the investment process.
Sure, they might not be as good at judging potential to execute as a seasoned team of investors, but they'll be a lot better at gauging interest levels.
I also wouldn't underestimate the potential of having a lot of tiny investors becoming product evangelists; if you've got a thousand people putting $50 apiece into a project, that's not only a thousand first users, it's also a thousand real people that will happily post links to Facebook, mention the product in a blog, recommend it to their friends, etc. Especially because they presumably were interested in it in the first place.
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The main thing crowd-funding has over big investors is that rather than having to predict what the mob will be interested in, the mob can be part of the investment process.
Sure, they might not be as good at judging potential to execute as a seasoned team of investors, but they'll be a lot better at gauging interest levels.
I also wouldn't underestimate the potential of having a lot of tiny investors becoming product evangelists; if you've got a thousand people putting $50 apiece into a project, that's not only a thousand first users, it's also a thousand real people that will happily post links to Facebook, mention the product in a blog, recommend it to their friends, etc. Especially because they presumably were interested in it in the first place.