Monday, 5 March 2012

Kickstarter Vs Crowdcube

Crowd funding getting popular. 

The advantage of crowd funding over Angel and Venture Capital (VC) is no investor via Crowd funding will demand a seat on board of your company. Leaving entrepreneur more freedom to manage their company compare to getting funds from Angel and VC.

Kickstarter in US was restricted by US Regulation D and entrepreneur cannot give shares in return of investment.

Crowdcube in UK not restricted by Regulation D and company in UK have ability to offer for shares in return.

This make Kickstarter in a very disadvantage position over Crowdcube.

Not anymore. US government is planning to amend it law to provide exemption on Regulation D. This put Kickstarter in same level playing field with Crowdcube.

Given a choice, which one do you choose? Kickstarter or Crowdcube?


Comparatively, listing in Nasdaq is much more difficult compare to Alternative Investment Market (AIM). Thus, funding via Crowdcube is much more attractive as it can later listed the company via AIM as exit strategy. Company also can follow Velti footstep by transfer from AIM to Nasdaq later. It is much more difficult to follow Kickstarter direct to Nasdaq.

Alternatively, company can separately raise fund for operation in US via Kickstarter and operation in UK via Crowdcube respectively. But it is a bit difficult to plan for exit strategy in such scenario unless both can scale to very large company respectively.




Update : Startups are now able to get crowdfunding from US investors : Senate passes crowdfunding bill, wisely adds protections for less sophisticated investors

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