Another one bites the dust
In January of this year, just 9 short months ago, WeWork’s valuation hit $47 billion, and has since dropped like a stone to a paltry $7 – $8 billion; they even accepted a bailout from parent-company Softbank. The venture capital industry is still reeling from this beloved Silicon Valley darling hitting the canvas. VCs tend to pour money into rideshares and food delivery services, but when their pockets are empty, the market could be refined in a big way. What will our daily habits look like if the cost of Uber rides increase significantly? And the price of takeout food?
Now that WeWork’s dust cloud has slightly settled, a common venture capital issue has prominently emerged. That is, tech goliaths gobbled up the largest slices of the venture capital money pie, comparatively. This amounts to unrealized potential for countless worthy entrepreneurs and startups with solid business plans in other areas, who are left struggling to secure funding and opportunity.
The ghosts of awesome startups past
Overlooked entrepreneurs, like those starting restaurants, are finding wonderful success in equity crowdfunding, away from the blinding lights of venture capitalism. Now, a wider, more motivated investor pool is able to join the market, along with traditionally underrepresented entrepreneurs. While many ‘everyday people’ may never own stock in Apple or Google, they now have the opportunity to invest and receive equity in the potential “Apple’s or Google’s” of tomorrow, thanks to the JOBS Act. The equity crowdfunding investing market is inclusionary – it also gives more people a chance to be their own boss. In 2018, equity crowdfunding was responsible for boosting local economies by $289 million. It can also boast upwards of a 60% successful raise rate, which is tremendous considering that venture capital’s success rate hovers around 6.5%.
As giants like WeWork and Peloton get cut off at the knees, many underfunded entrepreneurs are hopeful that this shakeup results in more money becoming available for non-tech startups. If so, we may be witnessing the crest of the tech-centric venture capital heydays. In fact, crowdfunding has been steadily gaining steam and respect in the capital markets, a momentum that’s projected to continue for years.
So, while Softbank may have extended WeWork’s runway with a $5 billion investment, it is slowly becoming evident that more venture capital money could soon make its way into the equity crowdfunding arena. With talks of a looming recession on the horizon, the focus of the venture capital industry just may very well turn their attention away from the hi-tech unicorn search, to seek other startups whose teams and business plans are more firmly rooted in reality, not VC-backed ‘hallucinations’.
Looking towards brighter today’s and tomorrow’s, those new ideas and new faces in the burgeoning equity crowdfunding ecosystem may find great benefit and opportunity if even just a fraction of VC’s usual investment power finds its way into equity crowdfunding. Or even better, if VC capital finds its way into my largest business interest, DigitalAMN (Digital Asset Monetary Network, Inc. (OTC: DATI).
I am a true supporter of equity crowdfunding; championing its cause at every opportunity. I do not however, believe that Reg. CF is a complete solution – not for anything really scaleable with sustainability. This is why regulation crowdfunding, while an important aspect of DigitalAMN’s ecosystem, isn’t the be-all-end-all. DigitalAMN is a business funder, developer and accelerator – which takes a very active role in being a launching pad for startups to grow.
As the investment paradigm shifts, DigitalAMN could prove to be a VC’s dream – equity crowdfunding and business development for long-term growth and structured liquidity under one umbrella. Some might say, perfection 🙂 .