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Currently viewing the category: "Crowdfunding"

Last week I published an article, written with Crowdfund Insider director and editor Charles Luzar on the subject of fraud in crowdfunding:  Crowdfunding Fraud: How Big is the Threat? 

Screen-Shot-2013-07-11-at-9.09.06-AM-300x172We researched and gathered data from hundreds of crowdfunding campaigns to get a sense of the scope of fraud and potential fraud.  Our specific purpose was not to come to any conclusions, but to get an initial state of the fraud landscape, and to solicit a more complete set of fraud cases – for a subsequent academic study of the data.   We want to know, apart from the hype and headlines, the true rate and potential for crowdfunding fraud – particularly since the specter of fraud is one of the primary drivers of the debated laws and regulations surrounding investment crowdfunding.

Give it a read.  And if you know of a case of fraud – no matter how serious, obscure or questionable – please use the link below to submit it to us for our study.

 

Fraud in Crowdfunding

As crowdfunding becomes mainstream, the potential for fraud will inevitably increase. It seems that each new day is accompanied by a scathing article or op-ed warning that we need to protect the general public from the impending onslaught of boiler room con-artists. Indeed, the issue of fraud protection has transformed the process of legalizing equity crowdfunding into a grueling, complex and contentious three-year process – as regulators, industry stakeholders and special interests wrangled over new rules meant to protect investors from fraud.

In this initial study, we came up with a set of fraud categories, unique to crowdfunding:

Gray Areas: A Taxonomy of Crowdfunding Fraud

  • Preempted Fraud
  • Stillborn Fraud
  • Attempted Fraud
  • Perceived Fraud
  • Backer fraud
  • Backer-Creator Fraud
  • Broker/Portal Fraud

read the full article …

Click here to submit a case of crowdfunding fraud

With your help, we may be able to offer some valuable insights on crowdfunding fraud – based not on conjecture, but on on actual cases and data; insights that can help guide and shape the next generation of crowdfunding regulations and best practices.

For the full article – go to Crowdfund Insider –  Crowdfunding Fraud: How Big is the Threat? 

 

bad-news 
 
Ordinarily it takes an act of God to make me spill a drop of my morning coffee, but reading the news this morning nearly caused a grand-mal seizure:

“Jilted Kickstarter Backer Neil Singh Is Now An Assistant Attorney General Of Arizona”

 
My first, second and third reaction was “This is really bad news for Arizona Entrepreneurs.”   
 
Arizona:  The state celebrated recently for being #1 in the US for entrepreneurial growth, has just turned towards a cliff.  Maybe I am being shrill, but read on:

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(Originally published as a Guest Blog on CX.com  on December 11, 2012) 

Crowdfunding. You’ve heard of it — sexy projects by entrepreneurs who buck the establishment by going directly to the public for funding. Or maybe you’ve heard of the other crowdfunding — fraud, deceit and boiler room brokers bilking widows out of their pensions and life savings.

It’s a familiar tune. New technology disrupts an established, elite industry and empowers us to do it better, fast and cheaper. And, in the beginning, the professionals, pundits and predictors of doom tell us how bad the world will be if the industry is democratized.

Anyone over the age of 35 can remember the same dire warnings about eBay and the entire eCommerce industry — typing in your credit card number online was insane.

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After I spoke about Crowdfunding:  Past, Present and Future, at the Arizona Innovation Summit, FunditTV decided to conduct a video interview.   During the interview, I talk a bit about my new Crowdfunding initiative, called Propel Arizona.

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Recently Entrepreneur.com (the website for Entrepreneur Magazine) posted an opinion piece called: Why Crowdfunding is Bad for Business I encourage you to read the article in full. But I must say, I found the argument misinformed, to be kind. More bluntly – the argument and article were condescending, amateurish, and uninformed. Let me address some of the many disputable points:

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