Why 'Crowdfunding' May Not Be Path to Riches

This article discusses the evolving seed-funding space and concludes, crowd-funding is difficult: 'Crowdfunding' May Not Be Path to Riches. 

While entrepreneurs are discovering the possibilities of crowdfunding websites such as Kickstarter, upstarts are realizing crowdfunding isn't an easy fix for raising money.

Kickstarter and competitors such as Indiegogo are online funding platforms that connect entrepreneurs with potential backers.

Much attention has been paid to breakout successes such as Pebble, a watch that syncs with smartphones including Apple's (AAPL) iPhone. The venture raised millions this spring on Kickstarter.

But for some upstarts that use crowdfunding to raise early-stage funding, the results can be more mixed. The early buzz wears off and the funding platform may in fact put more pressure on entrepreneurs to deliver – often in a very public forum, where disgruntled comments can quickly go viral via Facebook (FB), Twitter or other social websites.

(Read more: Lockitron: How a Startup Overcame Kickstarter's Rejection)

"A lot of people think Kickstarter is a pot of gold," said Eric Corl, co-founder of Fundable, a company that's applying crowdfunding to the venture capital process. But crowdfunding doesn't make raising capital easy. "It makes it easier," Corl said.

In a Wharton School of the University of Pennsylvania analysis of Kickstarter campaigns, authorEthan Mollick found 75 percent of design- and technology-related projects on Kickstarter failed to meet promised deadlines. The research was released earlier this summer.

Turns out technology alone can't fix what entrepreneurs have known for decades: starting a new venture is a huge gamble…

Keep reading: Why 'Crowdfunding' May Not Be Path to Riches – Yahoo! Finance.

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