Kickstarter’s Millions and Mirages and the JOBS Act

When Pebble Technology posted its proposal (video below) for a customizable watch that is compatible with smart phones on Kickstarter, it sought to raise $100,000 by May 19th. Today, it has already raised in excess of $10 million making it the all-time crowdfunding king.  At the same time, a video game project Mythic: The Story of Gods and Men has been pulled after it bloggers revealed it to be a fraud t teaser screenshots had been copied from unrelated concept art and graphic design tutorial websites.  Thus the promise and risk of crowdfunding on display all at once, although crowdfunding proponents would argue that the “wisdom of the crowd” prevailed by exposing the fraud.

Under the newly enacted JOBS Act, businesses will be able to offer equity via SEC approved platforms once regulations are issued late this year.  Congress authorized an issuer to raise up to $1 million over a twelve-month period (or some lesser amount to the extent there is prior fundraising) while investors are limited to a maximum of $2,000 or five percent of annual income or net worth for investors with income or net worth less than $100,000 or 10 percent of annual income or net worth up to $100,000 for investors whose net worth or income exceeds $100,000.

 

More Info: Kickstarter video game project exposed as a scam. BBC, Meet The 25-year Old Who Raised Over 8 million on Kickstarter, Huffington Post; http://www.kickstarter.com/projects/597507018/pebble-e-paper-watch-for-iphone-and-android/widget/video.html.

Dana Mauriello, Co-Founder and President of ProFounder, talks about what crowdfunding is and why the JOBS act that the President signed on April 5th, 2012 will make access to capital more readily available for small business.