It was bound to happen. A crowdfunding platform called First Asia Alliance apparently misrepresented investments, may have mishandled investors’ money and now the owners may now be bankrupt.
Crowdfunding is a ripe opportunity for fraud and we know that mismanagement is rampant in some non-business crowdfunding platforms like Gofundme.
Fortunately, this failed crowdfunding project was in Asia so few if any U.S. retail investors are likely to be involved. Yet this is a risk that we must consider as advisers, business owners and investors. At a minimum, I suggest a conversation with a third unrelated adviser before considering any investment in a crowdfunded business. I am happy to schedule a brief conversation on this issue.