You only have to wait a few years before the “new fad” in financing strategies appears. Some of these fads become legitimized and stick with us, becoming trends and others – well they’re fads…
If you are in the Energy sector, this isn’t as big an issue. In the Energy sector you have more standardized methodologies when you raise capital, standard term sheets, valuations, ways to use public markets etc. You pretty much know that your outcome is binary, and identified to you in a short period of time.
We are missing this in tech, partly because of the “1 in 99” rule with VC’s (1 in 99 get funded), but mostly because of the length of time it takes before the idea becomes reality and the reality equals revenue. This distance from idea to revenue is too great an obstacle for most savvy investors. Therefore, it leaves the tech entrepreneur no choice but to be extraordinarily creative (think racetracks and casinos) about how to keep ga (money) in the tank (company) during this “valley of death”.
This leads some tech entrepreneurs to check out the latest fad – crowdfunding.
I’m going to cut right to the chase and give you four reasons why this won’t stick as a financing vehicle for tech entrepreneurs – At least the serious ones.
Read More at Calgary Herald
