A story in U.S. News, “Crowdfunding: a New Frontier for Investors,” taps Olin’s senior lecturer in entrepreneurship, Cliff Holekamp on the pros and cons of funding a startup with Kickstarter or other crowdfunding tools. Holekamp sees a downside:
“Entrepreneurs funded by lots of smaller investors receive less oversight, and receive less valuable guidance, than those backed by a few larger investors…Founders might operate their businesses with less discipline when their funders are less engaged and more distant.”
But Holekamp, says there is a positive side for investors who want to direct their money to a good cause or disruptive service.
“The real reward for crowdfunding investors isn’t financial,” Holekamp says. “It’s the opportunity to participate. Helping an entrepreneur achieve their dreams, and being a part of a company that changes its industry – or maybe even the world – is exciting and personally rewarding. Everyone should have the freedom to make a difference with their dollars.”
