But real investors also need capital, or it helps to have more capital. Crowd funding is a way to lower your risk. The big investor organizes the venture and finds opportunities. They put less money in but still get the same payout. The tiny investor gets less of a return on their money, but gets an opportunity to invest at a stage they are normally shut out of. They're paying for the opportunity essentially.
A large number of naive investors as partners increases the risk of an investment.
It's the reason that professional investors tend to put together deals with other investors they have previously worked with. It's the reason they form groups.
As I've said, crowdsourcing will attract dumb money. Smart money will tend to prefer not to become legally entangled with it. People with lower inhibitions will enjoy a feeding frenzy.
Don't misunderstand me. There will be widely trumpeted crowd source success stories.
It just won't change the fact that most people will lose their investments - heck that's even the rule for smart money investing in startups.
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But real investors also need capital, or it helps to have more capital. Crowd funding is a way to lower your risk. The big investor organizes the venture and finds opportunities. They put less money in but still get the same payout. The tiny investor gets less of a return on their money, but gets an opportunity to invest at a stage they are normally shut out of. They're paying for the opportunity essentially.
>"Crowd funding is a way to lower your risk."
A large number of naive investors as partners increases the risk of an investment.
It's the reason that professional investors tend to put together deals with other investors they have previously worked with. It's the reason they form groups.
As I've said, crowdsourcing will attract dumb money. Smart money will tend to prefer not to become legally entangled with it. People with lower inhibitions will enjoy a feeding frenzy.
Don't misunderstand me. There will be widely trumpeted crowd source success stories.
It just won't change the fact that most people will lose their investments - heck that's even the rule for smart money investing in startups.