The main problem with crowdfunding is prevention of scams. The SEC which is responsible for implementing this bill,have an expensive list of demands(papers, lawyers) for companies wanting to go that route, making the whole process not worthy for companies.
Until a solution for this problem will be found, it's hard to see crowd-funding becoming an option.
Yes, the former is much worse - you're immediately don't get a useful product, instead of not getting a paper which may or may not bring you some money somewhere in the future if 1000 things align right. Note that most sales of product actually end up in product being sold, while most startups end up failing and wiping their investors clean. That is without any fraud - just plain statistics.
I had backed hundreds of projects. Next year I would make a thousand or so.
How many scams I got into?
Zero.
It is pretty easy to spot who is serious and who is not, who will deliver and who wont. The great thing about capitalism is being left to carry the risk yourself.
> The great thing about capitalism is being left to carry the risk yourself.
When it comes to equity investments, and not Kickstarter-like donations, the type of disclosures that the SEC is going to require are in line with what any serious investor would want even if they weren't required. Managing risk (which is not the process of asking your gut for its opinion) requires some level of transparency.
Obviously, many investors are not sophisticated or diligent, so they won't even review the disclosures available to them, but you also have to look at equity crowdfunding from the perspective of the people raising capital. Disclosure provides them with desirable protections too. The last thing any founder needs is several hundred ignorant and/or lazy shareholders who are going to be calling up an attorney when their $1,000 investment doesn't produce the expected return, even if the expected return was completely unrealistic.
Bottom line: this notion that markets don't demand some level of disclosure and transparency without regulation is silly.
Until a solution for this problem will be found, it's hard to see crowd-funding becoming an option.