Crowdfunding is double edged sword. It has its advantages and disadvantages both.
Advantages - A large number of people have the opportunity to invest in something that can be very big in the coming time. Since a large group is involved the risk of making a bad judgement is equally shared amongst them. It opens the window of opportunity to people of the entire planet. Its reach is not limited to a few venture capitalists. Thus Crowdfunding breaks the wheel of the cycle where in only the rich get richer. It is also an easy way for startups to gain some initial capital for their projects as many people behind promising projects do not have the connections to the super rich or a particular breed of venture capitalists.
Disadvantages - When people are influenced by the crowd mentality they tend to ignore their own understanding and judgement. Thus a lot of gullible people who do not understand what the project is invest because of the herd mentality or simply because of greed. As a result when a particular project fails they may have a feeling that they were cheated. Crowdfunding is not a Govt regulated area. Thus a lot of sham companies and projects will creep into it with time. As the number of Sham Companies increases its bound to repel people who lost money in it once.
