Authors Document the Nascent ‘CrowdFunding Revolution’

By Robert J. Mullins
Senior Staff Writer
CrowdFundBeat

Nov. 6, 2013 — Crowdfunding is described as a natural extension of the crowdsourcing enabled by the creation of the Internet and as a new way to raise venture capital to help create the next great company, according to two authors deeply involved in the subject.

“The Crowdfunding Revolution: How to Raise Venture Capital Using Social Media” was self-published by co-authors Kevin Lawton and Dan Maron in 2010 and a second volume was published by McGraw-Hill in 2012.

Cover

The book was itself a product of crowdsourcing with Lawton blogging about the subject from Silicon Valley in California and Maron providing an academic point-of-view from Tel Aviv, Israel. In fact, both men collaborated on the book largely via Skype and only met in person for the first time at an academic symposium on crowdfunding held at the University of California-Berkeley in October.

In an interview with CrowdFundBeat’s Richard Bliss (link), the authors explained the significance of crowdfunding and, in particular, crowdfunding as an adjunct to venture capital financing.

“We have an alternative entrepreneurial finance mechanism that could become viable,” said Maron. “I deeply believe that the crowdfunding revolution will have its impact in the next few years.”

Crowdfunded venture capital is just on the horizon in the U.S., as the Securities and Exchange Commission (SEC) recently released 585 pages of proposed rules governing the solicitation of equity crowdfunding investments by “non-accredited” investors; the SEC recently enacted a separate set of rules permitting equity crowdfunding, but only by “accredited” investors.

Until now, most crowdfunding in the U.S. has been reward-based crowdfunding in which donors to a campaign get a token gift as simple as a t-shirt or a copy of a product being developed by a start-up. Often they donate simply as a show of support for the project.

 

Equity-based crowdfunding can present a new opportunity for venture capitalists or angel investors, said Lawton.

“For them, it is more of an opportunity to do something different; it’s something different that they need to know about,” he said, adding that the book is part of an effort to educate those professional investors and investors at large on the value of crowdfunding.

In the book, Maron and Lawton detail the development of crowdfunding as of a piece with the development of the Internet in general and crowdsourcing in particular.

The Internet connected billions of people around the world who could exchange information and ideas. From that developed crowdsourcing, examples of which range from oil and gas research, the search for extraterrestrial life and problem solving to restaurant and movie ratings, the authors wrote.

CrowdFundBeat is publishing this excerpt of “The Crowdfunding Revolution,” which is available at, among other locations, Amazon.com as an e-book or hardcover book.

 

 

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