I love contracts. Some might even snicker at how excited I get at the possibility of putting a big deal together and using some creative drafting to make sure everyone is happy with the Agreement. Yes, I am a bit of a contract nerd. Contracts are a beautiful thing. The ability for you to strike a deal with another business and have assurances that they will follow through with their promises is a wonderful thing.
But there are a lot of bad contracts and agreements out there. This might sound familiar to you: A business owner signs an agreement to sell machines he manufactures to a customer for 5 years. He is required to build and sell .so many machines per month and the customer will pay him a set price for each machine. In year 3 of the deal, the cost of the business owner’s raw materials drastically increases and if he continues to build and sell the machines under the agreement, he will lose money. How do you get out of a bad business contract? This is just one scenario. There are thousands of other ways to be tied up in a bad contract.
Last month critics of crowdfunding jumped on their soap boxes after the sale of Oculus to Facebook. After the completion of the $2 billion acquisition was announced, social media began to buzz. Those that are opposed to the idea of crowdfunding took this opportunity to proclaim that those that had backed Oculus' Kickstarter campaign had somehow been swindled out of a financial windfall. This could not be further from the truth.
Crowdfunding is not a simple concept. In fact. the term 'crowdfunding' has become an umbrella term for many different means for entrepreneurs to use in order to raise capital for their businesses. The crowdfunding detractors mentioned above appear to be attempting to use this broad term to confuse the public to satisfy their own personal agenda. There is a vast difference between rewards-based crowdfunding and the sale of debt or equity in your company.