Crowdfunding legislation

@andrewmcpherson If that is the case they would be better going to VCs or Angels

@andrewmcpherson the whole point of crowdfunding, as currently practiced, is to put an idea out to the world, and invite people to help make it happen by donating cash (or in this case of this legislation investing it). Are you seriously suggesting that someone should be able to solicit up to $2 million from the public for an “investment” without regulation? Surely people deserve to have their savings protected from ponzi schemes and other scams.

I know of a number of crowdfunding campaigns for things which sounded like a really good idea, but the people who got the money never really followed through on what they promised. Sophie Novack of “Open Source Permaculture” disappeared with thousands of dollars crowdfunded on IndieGoGo, and the work she promised never appeared. The Diaspora group promised P2P software with all the functionality of FB, and all we got was a retarted Twitter clone that wasn’t even as good as the already existing StatusNet. At least in this case, nobody was expecting to get their money back, so the risk is not high. When these kind of campaigns become "investments" with a promise of returning the money, maybe even with a dividend, the risk becomes exactly the same as investing in any business, and needs to be carefully regulated to protect the public from scams.

1. The first rule of business is that the chance of return from investment indicates how high the profitability should be.
2. If you do not get sufficient investment at the right time, then the business will have to rely on the entrepreneur's cashflow to grow.
3. If the entrepreneur has given up their steady income source to start the business, then that business has a higher risk of failure if it is being used as the sole income for the entrepreneur.

I've experienced 1,2&3 with my family business, my previous employer and have no concerns with this if I setup a business of my own.
I'm not sure of the permaculture example, it's not my call to say if she didn't get enough, or if she simply went shopping with other peoples money.
Diaspora development pretty much died with the chief developer passing away at a young age, which is just one of those things where it is a good idea to document concepts and how to achieve project goals. (Admittedly, nobody could have reasonably foreseen what happened to that guy.)

As a counter-example, there are people in auckland and wellington who will take out mortgages for $2 Million solely on the basis of what they are currently earning.
I would doubt that forcing more regulations on people taking out large mortgages for the spurious reason of savings protection on investments would do anything useful.

As the whole concept of investment revolves around levels of risk relating to the return, this kind of risk is considered similar to private company shares, whereby it is expected that the investor actually weighs up the business case and takes a higher risk than a public company would offer, in return the investor waits and eventually either makes more back than they put in, or they lose what they hadn't expected back in the first place.

In conclusion, your logical fallacy is : expecting investments to be a sure return of your money.
Even treasury bonds can fail to be repaid at all, if there is a government crisis such as tea-party morons in the US senate, or Robert Mugabe as President.

While I agree with @andrewmcpherson is saying, no investment is a sure thing.

Crowd funding needs a limit on what it can ask for. Without a limit, and with a good enough marketing campaign. Someone could dupe large number of non-savvy individuals into giving money to projects that they never intended to complete. This should be considered fraud and punished as such.

If on the other hand you feel like donating to my pocket fusion reactor project, I'm trying to raise $1 billion....just saying.

@adambullen I don't want to invest anything, but I want to pledge for 5 of your reactors for me and my family. And I want them now. Do I get a mass rebate? AND A T-SHIRT WITH YOUR LOGO PLEASE.