You haven't explained your proposed legal structure so it's hard to comment. How do you plan to structure it? Will the money each person contributes be a donation, or a loan, or an equity investment, or ???

The money each person contributes will be an equity investment.

You cannot advertise equity investments to the general public in the USA without registering with the SEC. Do you plan to do this?

Thanks for your help. This was just an idea I wanted to run up the flag pole. I don't plan to implement the site unless I can partner with someone who would be able to handle the main part: the SEC and legal.

That said, I'm dying to see someone (anyone) implement something like this. It's simply the future of funding web applications, in my opinion.

i like the idea of investor "bidding" but of course it seems like a hard task keeping everything honest.

the whole concept seems burdened "legally" so to speak.

would be neat to see something like this fly, though

Thanks for your feedback. I agree -- this biggest hurdle is creating the legal framework for it.

Generally, it seems to me like a natural progression. Web startups don't need VC in many cases -- they need funding closer to 20,000 than 2,000,000, and that would lower the due diligence somewhat, allowing more deals to be made. Angels are location-centric, but web startups are happening everywhere.

This would change things so that if some web startup only needs 20,000, it's a matter of 200 people around the world who believe in their idea enough to put in $100. Plus the valuation would be more market-driven.