PeoplesVC, an online crowdfunding platform, announced it will bring grown-up experience to the table in the form of new hire, Michael D. London. London will join the company as a boardmember and principal shareholder and will assume the role of its chief executive.
The startup allows unaccredited investors to invest up to $1 million in startups and existing businesses. Unlike Kickstarter’s donation-based model, individual investors take an equity stake. The company was founded in May and claims to be the first of its kind.
However, sites like Fundable and CircleUp have a similar M.O. to take advantage of new legislation passed through the U.S. JOBS Act, enabling companies to sell stock directly to the public. When PeoplesVC launched, it moved out of beta so small businesses could get listed on the site while the SEC finalizes its guidelines.
Crowdfunding is an exploding trend but has received its share of criticism. Investors need to be carefully screened to avoid incidences of fraud and mismanagement. The opportunity is still relatively small. Felix Salmon at Reuters published this notable take down of inflated statistics for the crowdfunding market and estimated the pie was only about $165 million in 2011.
The founders hope this will bring legitimacy to the space, which is still considered high risk. “There are a lot of question marks around crowdfunding,” said PeoplesVC founder Akhil Garland in an interview with VentureBeat.
London said he is mindful of the risks but views this is an opportunity to “kickstart” the entrepreneurial economy.
“The industry is going to attract mostly smart, honest, ethical people looking to build long-term viable businesses backed by some of the best VC firms in the world who have not the slightest interest in making a “fast buck”, said London he a statement. He has raised $300 million in debt and equity for previous companies, including HQ-Headquarters Companies and Fort Lauderdale-based The Memories Company.
The New Hampshire-based operation also announced it will be relocating to the nation’s tech capital, San Francisco.