aresuffering from lack of investment.The reason’s pretty straightforward, as Wilson puts it:
VCs are professional money managers. We are provided capital to invest as long as we can return it to our investors with a strong return in a reasonable amount of time. A strong return is 3x cash on cash. A reasonable amount of time is ten years max.Internet and mobile product development cycles are measured in months not years. And the capital required to get a product built and into the market is less than $1mm. And the returns, when things work out, can be enormous.Contrast that with biotech. A new drug takes $100mm in capital investment to get to market. And that process can take a decade or more.
So what do you do if you believe the earth would be a better place with cutting-edge research in drugs and energy creating earth-changing companies? Gladyou asked.Congress has approved and President Barack Obama has signed a law that allows companies to raise small amounts of money over the Internet.Wilson points out that the law allows investors to make smaller, personal bets on companies that could take much longer to grow up, but that have a societalbenefit:
If we saw a promising technology that could prevent or cure cancer, we would be inclined to help fund that, regardless of the timing and magnitude of the financial returns it could produce. If we saw a promising technology that could store and move energy more efficiently, we would be inclined to fund that as well.
And Wilson isn’t the only person thinking in a similar way about crowdfunding. Already, Brooklyn startup
is allowing companies to raise money over the Internet inexchange for goods. How many more will join the fray when companies can sell equity over the Web?
o Good By Crowdfunding Well - Business News - Portfolio.comhttp://www.portfolio.com/business-news/2012/04/26/do-good-by-crowdfunding-well2 of 34/28/2012 10:44 AM