Eat a $15,000 Potato Salad - Differences between Equity and Rewards

Written by kimberly.dodsonPublished in
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Potato Salad on Kickstarter

Looking to raise funds from investors to pursue your dream? Crowdfunding opens the door to a variety of different investors interested in what you may have to offer. Equity crowdfunding can help build companies, which creates jobs and, if successful, returns for those who invested money. Sometimes the result is very handsome returns. Rewards-based crowdfunding does not bear this promise, but even still, vast amounts of money go into these campaigns, such as $44,989 into potato salad.

Zack Danger Brown was on a mission to make potato salad. Although he intended to raise only $10 to make a bowl of potato salad, which he had never made before, he ended up raising much more for his savory goal on Kickstarter.  Brown said, "Basically, I'm just making potato salad. I haven't decided what kind yet." Zack Danger Brown used Kickstarter to raise awareness for his first attempt to make a potato salad. People on the internet donated money to a man who had no experience making potato salad. There was no higher purpose — just a bowl of potatoes.

Is it ridiculous for a person on the internet to donate money to a man who had never made potato salad?  We don't even know the mayonnaise he's going to use ... 

Once Title III passes, individuals, including nonaccredited investors — a majority of the population, can then put their money into real businesses. Title III holds a promising future for anyone who wants to invest in startups and gain some financial return.  Some people who donate to rewards-based campaigns believe in the startups' dreams; people believed in Zack Danger Brown's dream.  But I just want to shed light for all those nonaccredited investors that soon there will be a market where you can help a business reach it's goal while receiving a return on equity. Therefore, the people on the internet who donated money to Zack Danger Brown will have something other than a bowl of potatoes to fund.  Once Title III passes, you can invest and hold equity in a company with potential — rather than a video of a guy making potato salad. Have these people been missing out on YouTube? 

Reward

Equity

Offers pre-orders/incentives, i.e. DVDs

Offers equity stake in company

No equity

Issues ownership in company (equity)

Anyone can back you

Currently only for accredited investors, soon to change

Crowdfunding is becoming a new frontier for investing. Rewards-base platforms tend to attract bizarre projects. The odd projects floating around the internet are sometimes successfully funded. This will not stop, even after Title III is passed. Once Title III passes, there were will an opportunity for the average person to invest. Start to get excited about what is to come!  At FundWisdom, we have a number of promising startups to invest in.  Learn more about the changing legal landscape and when the remaining 99% can invest.

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