The Common Misconception of Public Money
Crowdfund Insider recently published an article exploring “The Psychology of Crowdfunding“.
The author, Howard Sherman (managing member of Crowdfund Buzz), writes “Far too many people approach crowdfunding with the mentality of a prospector off to the gold mine to make their fortune; they operate under the mistaken notion that all they need to do launch their campaign and immediately start raising money day and night.” This mentality is similar to a lot of entrepreneurs who enter the microcap space.
Like microcap management teams that go public via a reverse merger, many entrepreneurs launch their crowdfunding campaign and wait for the money to roll in. When it doesn’t, they start to realize the public markets and crowdfunding are not sources of free money.
The author’s company is a crowdfunding promotion company. Sherman says that he often has conversations with entrepreneur running failing crowdfunding campaigns where he is asked;
“Do you guarantee I’ll get funded if I use your service?”
“What’s your success rate?”
“Can you promote my campaign now and I’ll pay you later after I get funded?”
Most microcap investor relations professionals can probably relate!
Sherman goes on to explain the risk reward mentality that requires crowdfunders to take upfront marketing risks if they want their campaign to succeed.
For more, check out the full article on Crowdfundinsider.com HERE.