Equity Crowdfunding and Venture Capital, More Friends than Foes?

By Motley Fool Staff Markets Fool.com

Equity crowdfunding is just starting to get its feet off the ground, but some trends are already becoming apparent in the industry.

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In this clip fromIndustry Focus: Tech, Motley Fool analyst Dylan Lewis interviews Slava Rubin, founder of Indiegogo, and the two talk about how venture capitalists' views of crowdfunding platforms have changed, and what it might mean for the future of equity crowdfunding.

A full transcript follows the video.

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Dylan Lewis: Within the VC space, andmaybe in the equity crowdfunding space, any trends that you guys have noticed? Like I said, it's early, but anything that you've seen emerge so far?

Slava Rubin: Before we even go to theequity crowdfunding space, you've noticed on the perks crowdfundingwith Indiegogo in the early days, VCs would look down on anopportunity on Indiegogo. And then slowly, they would take notice. Now, it's almost become a standard approach to first further validate your ideas, is to go through a perks-based campaign on Indiegogo, or we become a discovery engine for a lot of VCs and institutions now. So, there's been well over $1 billion of venture capital andinstitutional money that has gone intocompanies that have first funded on Indiegogo. So, funny, again, Republic Restorative, just an example, they first did Indiegogo perks, got off the ground,and then could have gone towarda few different paths to getmore institutional money,but then they came on to our partnership for equity raise. So,it's an interesting exampleof the graduation from one to the next. And then, as relates toequity crowdfunding and the trends related to the VCs and such,I think we're seeing it is quite complementary, and VCs are seeing it as anotheropportunity. I do see in the future, I think, where this is evolving is, some VCs will use it as a validation element, oreven more interesting will be, as the total raise, let's call it 100%, a portion that total raise will be carved out and said, "OK, the VCs took 70% of it. Here's 20% of it,put it on equity crowdfunding so we can engage our fans, our audience,our customers and get them more involved." So,I can see this being a complementary thing.

Lewis: Yeah,the way you're describing,sounds like the traditional crowdfunding, where you give $20 and you get a T-shirt, or you give a larger amount and maybe get an early prototype. It'skind of a court of public opinionon the concept itself.

Rubin: That's for perks.

Lewis: Right, for the perks-based one.

Rubin: And that helps for the VCs to jump in. But then, I also think the VCs willwant to give a portion of venture round to usto then distribute it through our unaccredited poolto be able to get more people involved,especially their customers.

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