How Venture Capital and Crowdfunding Can Be Mutually Beneficial V.C. and crowdfunding each have a place in the entrepreneurial landscape.
Opinions expressed by Entrepreneur contributors are their own.
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).
What's more, I'm not willing to concede that venture capital is irrelevant for financing cool new consumer gizmos or, more important, that it can't work in conjunction with crowdfunding. In fact, an increasing number of venture-backed startups are choosing to launch products on Kickstarter, in a symbiotic relationship that works for both the startup and the investors.