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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.