The Symbiotic Relationship Between Venture Capital & Crowdfunding

Venture Capital & Crowdfunding:

A Mutually Beneficial Relationship

The Pebble E-Paper Smartwatch and Coolest Cooler Kickstarter projects

might have you thinking Venture Capital is a thing of the past.

But these successful $10 million+ campaigns are the rare exception on crowdfunding sites. Most projects die

out without even reaching their modest monetary goals.

Rather than making venture capitalists an irrelevant dinosaur, the Darwinian

crowdfunding model has actually helped VCs tremendously.

Thanks to crowdfunding campaigns:

• The product team gets to pitch their idea to their intended audience who actually want to help fund its development.

• The venture capitalist gets to test the potential viability of the product before risking too much money.

Product teams also benefit from this symbiotic relationship because an

initial crowd funding success will likely attract VCs looking to invest.

According to CB Insights, roughly 10% of all successful $100,000

crowdfunded projects get venture capital funding after the end of the

campaign.

Not all products can be explained in a creative 5 minute video.

But for the ones that can, they’ll continue to benefit from the symbiotic relationship

between crowd funding and venture capital.

Thanks for watching!