do you mean they are or aren't popular with companies looking to raise equity or people looking to by equity?
Well, they aren't all that popular with either investors or asset issuers.
And I understand why though -- the GLBSE experience and its unorderly shutdown was a prime example.
Many investors who had not been used to performing due diligence first-hand themselves were led to financial slaughter in many instances. On the asset issuer side, selling shares in a company to the public is yet today something illegal here in the U.S. unless done in a way that is compliant with securities regulations (again, there are changes coming for crowdfunding but they are not in effect today, and will be of limited use when they do).
So you have the differing approaches being taken in this post-GLBSE environment to try to figure out a method that meets to goal of bringing capital from those wiling to invest and delivering that capital to those who have legitimate ideas or existing businesses that can convert that capital into profits.
Even some risky GLBSE assets did have some successes. ASICMINER, for instance, raised about $100K USD worth of bitcoins on GLBSE to fund their ASIC venture. Days ago they started earning revenues of about $30K USD worth of bitcoins PER DAY and are just now paying dividends at a level that simply doesn't exist elsewhere.
The presumed rulemaking to come from the SEC on equity crowdfunding would never let an ASICMINER get its start here. The amount being raised was probably too small to justify the expense of the preparatory steps to reach an IPO, for instance. The shares could only be offered in the U.S. to U.S. investors (ASICMINER has shareholders around the world) and there's no way the investors could acquire equity and remain anonymous -- the State will never endorse a system in which profits cannot be tracked and taxed.
At the same time, if an issuer that does go through the SEC's hoops and then tries to disappear in the middle of the night, investors would have more than a name and a (photoshopped ?) copy of a Chinese ID card (which, presumably was the extent of the burden GLBSE required of ASICMINER before they got the green light to raise that $100K worth of bitcoins).
Entrepreneurs and financial supporters are free to form a voluntary association, but when the agreement is that profits are to be shared with those who have contributed that's when the State gets in the middle and makes proceeding so expensive that what you end up with is progress impeded.
Many entrepreneurs with great ideas remain without access to capital because they don't have wealthy friends or family, or aren't willing to cede the levels of equity traditional seed / angel / VC investment approaches require, or simply because the idea is not yet fleshed out enough to be of interest to the particular set of investors it is being presented to.
But the Internet and equity crowdfunding combined may cause an investor in Clovis, CA who is really interested in the same innovation as the maker in Cleveland, OH to extend $100 towards her goal of the $15K needed for equipment to be able to produce a working prototype. But different from a Kickstarter or other donation-based crowdfunding approach, with equity crowdfunding the investor from Clovis gets a proportional share of the profit if that venture pans out -- and voting rights and whatever else the company charter has specified.
That would be a great story, right? Well, we simply won't hear of it happening because of laws the SEC has "to protect investors". That $15K raised won't even cover the legal costs for raising capital through crowdfunding. So now this Cleveland wonder needs to raise $35K, $20K for the legal and administrative stuff and $15K for the equipment. And by the time that the funds are raised and the $15K worth of equipment eventually arrives the Cleveland maker's competitors might have already emerged. And even raising the $35K of capital now cannot be assumed as being a given since instead of needing to raise just $15K, the additional $20K may have caused the whole venture to become deemed now as something unattractive to investors.
Now if the Cleveland's maker were to list her venture on BitFunder today, she may have her $15K worth of coins tomorrow. That's an efficient system for raising capital.
We are letting innovation today be stifled from these rules. BitFunder and potentially others provide a glimpse into what is possible when those rules are bypassed. But those rules being in place are harmful yet. Ziggap, a recently listed asset on BitFunder, claims to not be offering equity in the company, only a share of the company's profits. That is weasel language composed specifically to get the benefits of raising capital (i.e., the transfer of bitcoins from the investor to the asset issuer) yet try to avoid getting in trouble for raising capital.
What a crock.
If I want to to invest $100 worth of bitcoins in Ziggap in exchange for a few thousand shares of their equity, why is my government making it impossible for this private contract between the two of us to be made?
[Edited for clarification and readability]
[Update: Oh, and that $20K needed for my example is an expense that would be incurred prior to the raising of capital, so the Cleveland maker would first need to borrow $20K in order to eventually raise the $15K for the equipment. Obviously, that's senseless. Also, that number for legal and admin for the process is likely to be much higher than $20K to boot.]
