I saw this first on Twitter/X from @ThatUmbrella@twitter.com (who is not a fan of Spoutible or its founder) that Chris Bouzy (Spoutibleโs founder) is seeking extra funds to keep the site alive & is turning towards Equity Crowdfunding as a way to acquire additional revenue.
Note: See update below as why this is not a good idea.
Spoutible also sent the same information via email & messaged users this information:
At Spoutible, our primary objective has always been to prioritize the interests and welfare of our community. Recognizing the dedication and effort our users invest in amplifying the platform's popularity, we believe they deserve to be stakeholders in our success. To this end, we are currently in advanced discussions with a prominent equity crowdfunding platform. This collaboration will provide our valued users with the unique opportunity to acquire a share in Spoutible, thereby directly benefiting from its growth and prosperity. We are committed to forging a more inclusive future where our users are not just consumers but also co-owners and contributors to our shared success. We would like to know what you think! (...)
Investment allocations would be structured to prevent any individual investor from acquiring a majority stake.
Approximately 10% of the company's equity will be held by the community, preserving its core mission and cultural values.
Measures would be in place to prevent hostile takeovers or influence by malevolent entities.
A comprehensive financial audit is mandated by regulatory authorities for equity crowdfunding.
Christopher Bouzy is seeking avenues to raise revenues to ensure Spoutible is self-sustainable. Some users were not thrilled by this measure, but Bouzy informed them that raising equity is needed to secure Spoutibleโs future.
There are limits, and I cannot fund Spoutible on donations and my private savings indefinitely. (@cbouzy@spoutible.com on Spoutible)
Obtaining funds to survive is something most social networks are struggling with right now, ranging from the Fediverse to Tumblr to even X (also known as Twitter) are all seeking out additional revenues right now.
If Bouzy can succeed in doing this, it would not be surprising to see this method mimicked by other players & platforms online.
Update: It seems as if raising funds via Equity Crowdfunding is considered an evil omen for a company due to the risks.
Greater Risk of Failure
A business that has been capitalized through equity crowdfunding arguably runs a greater risk of failure than one that has been funded through venture capital or other traditional means that offer seasoned professionals to help steer a start-up through early development challenges. The success of a business cannot be assured merely by funding. Without an adequate business plan and support structure, even promising ventures can fail.
Fraud
Online forums and social media are ideally suited for equity crowdfunding because they offer wide reach, scalability, convenience, and ease of recordkeeping. But these very features also make it easy for scammers to set up dubious ventures to attract equity crowdfunding from naive or first-time investors. Never skip the step of doing due diligence on any investment you're considering.
Years to Materialize
Every investor expects some future return. However, returns on equity crowdfunded ventures may take many years to materialize, if at all. For example, management may deviate from the business plan or have difficulty scaling the business. Over time, this may lead to capital erosion rather than wealth creation. There may be an opportunity cost attached to your investment that you should consider since it ties up capital that could be used elsewhere. (Investopedia)
Before you spend or invest your money in any venture, you should practice due diligence, but the fact that Spoutible is seeking to use Equity Crowdfunding to raise funds is not a good omen.
It would be better if Spoutible offered premium features instead, which is something the Mastodon variant Counter Social has done (the latterโs pro features should be mimicked in my honest opinion).
Discovered via: @EwwwAmberlyn36@twitter.com & @KarenDagger@twitter.com on Twitter, respectively.
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