It seems as though every major news story is now followed by a crowdfunding story attempting to ride those coattails. The Hostess bankruptcy is a good example. I’m obviously a big believer in crowdfunding. I am a believer in what it is now and I am a believer in what it could become as a mechanism to unlock business capital if the SEC and FINRA process preserve the legislative intention of the JOBS Act. I am even optimistic about what crowdfunding could do in a bankruptcy context. However, as we wait for the SEC to figure out the rules, crowdfunding is also being used as a buzzword simply for getting PR or site visits.
As to the Hostess bankruptcy, one group immediately posted a campaign to buy Hostess, or pledge to buy Twinkies or some other outlandish plan to raise $500 million. That’s $500 million! The only thing that outlast the life span of a Twinkie would be to run a successful crowdfunding campaign for $500 million. Most took it for the PR stunt that it was although at least one local news source thought the PR stunt was a good idea. I am sure there were some good intentions somewhere but this type of self promotion erodes the crowdfunding brand before real crowdfunding investment has a chance to establish itself as a sector. I wonder how many Hostess employees saw the press and actually got their hopes up that their job could be preserved.
More recently, Forbes has run a column which jokingly (presumably) suggests that unions should themselves crowdfund the purchase of Hostess. I assume this is a joke even though the quality of Forbes journalism has gotten so shoddy that entirely serious stories often seem to be in jest. In any event, these are the things I suppose we will have to survive until the rules for investment crowdfunding become known. Only then will we have genuine stories of what can be done with investment crowdfunding . . . of course, unless the SEC kills it.