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The Importance of Crowdfunding in the Startup Ecosystem
In this interview for Startup Magazine, the Founder of Etohum Burak Buyukdemir talks about the importance of crowdfunding in the startup ecosystem and gives his opinion about the crowdfunding platforms in Turkey. Read the whole interview below:
What is the importance of crowdfunding in the startup ecosystem and how does this system operate globally?
Both equity and reward-based crowdfunding platforms are of vital support to the ecosystem, due to their ever-growing volumes and hence, importance. In a nutshell, crowdfunding democratizes access to tech investment opportunities: what was accessible to a small network of well-connected wealthy angel investors is now available to the general public. There is no reason why the wider society should not have an opportunity to support entrepreneurs and reap rewards of successes. For entrepreneurs, crowdfunding allows them to tap into larger pools of capital. Seed finance is difficult and challenging for entrepreneurs and crowdfunding brings more transparency, flexibility and opportunities on both ends of the VC spectrum.
In order to develop the ecosystem, come up with innovative, creative ideas and get these ideas supported, what kind of support does this system need?
Development of the ecosystem cannot be attained through one-sided initiatives – all agents and stakeholders have to undertake efforts to help entrepreneurs bring their ideas to life. In the case of crowdfunding, although it opens up opportunities, it will not achieve necessary scale without equity crowdfunding supportive legislation that allows unaccredited investors to participate in fundraising. Not only that, quality of startups has to improve and investors have to be introduced to risks and investment strategies. Crowdfunding platforms are both mentoring entrepreneurs and educating investors, however without the ecosystem-wide support these opportunities will not live up to their potential.
What do you think about the performance of the crowdfunding platforms in Turkey? It is a small amount, what kind of development do you expect? Why do you think this system is not well-known and what has to be done in order to develop this system?
Although globally crowdfunding is experiencing unprecedented success, Turkish ecosystem has not yet endured the positive impact of crowdfunding platforms. Both legislation and investors have not kept pace with the entrepreneurial ecosystem. Yet that is onset to change – as Turkish entrepreneurs move up the learning curve and enterprise lifecycle, their entrepreneurial skill set will grow and attract interest. However investors also have to undertake risk, legislators have to create opportunities for innovation and mentors have to coach startups.