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How Venture Capital and Crowdfunding Can Be Mutually Beneficial

This story appears in the December 2014 issue of Entrepreneur. Subscribe »

In the wake of success stories such as Coolest Cooler, which raised more than $13 million on Kickstarter, I’m starting to hear talk that crowdfunding is making traditional financing less relevant. I question this logic—and not just because I’m part of the traditional financing world.

There are a number of reasons. First, not every product can be explained in a five-minute video (think: your next advanced iteration of carbon fiber). Nor can every product be built for prices the average Joe is willing to risk (for example, the next Tesla automobile), or be brought to market for

less than $10 million (e.g., the next generation of cholesterol drugs).

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