Ask a technology start-up in London how they're thinking about raising investment cash. Angel investors probably feature highly. And at least half will probably mention crowd funding.
The problem with the former is that there's only a limited number of wealthy individuals prepared to risk hundreds of thousands if not millions in a start up. And risk they do as, according to a recent Wall Street Journal article, three out of four start-ups fail.
And this leads to government pandering via tax policy to ensure the wealthy people needed to fund growth don't leave the country.
But we are the 99.9%! A thousand pounds' investment from a thousand people is as good as a million from a single high net worth individual.
And, for many businesses, crowd funding offers a solution.
Say you want to make a funky new bracelet-cum-intergalactic-communicator. You've already invented the technology, have a prototype and a business plan, but you need £1m to finalise the design and set up production.
If you can convince 12,500 people to effectively pre-order at a price of £80 you achieve three things simultaneously.
You create a tried and tested market for your product (your investors are also your early buyers, buyers who are prepared to stump up hard cash), your raise the cash needed to launch; plus, you distribute the risk of failure over many (ordinary) people at an amount they can afford to lose.
Crowd Funding has limited appeal
But crowd funding doesn't suit every venture. Few tech start-ups have a tangible first product that's attractively priced to convince enough funders to pre-order at risk. Funders still need to be convinced of the integrity of the business and the plausibility of the business plan. What if development costs double in the first year, are we all left with nothing or all tapped-up for a further £80?
And who owns the company? In many circumstances the crowd is left with very little more than one shiny thing and their name on a roll call of founding members; and as for the latter... Well you can get your name in the International Start Registry for far less.
As in a conventional funding arrangement, the funders take all the financial risk. But when a crowd-funded company becomes successful, the founders not the funders end up owning the whole company.
Now wouldn't it be better if there was a way to offer shares to the crowd funders...
But there is a system to manage multiple investments from many people that does guarantee investors a share in any future success; but it just so happens that many crowd funding platforms specifically outlaw offering shares to funders, possibly to work around legislation designed to protect investors.
Why do companies float only after they've grown?
Only we don't today see stock markets used much for growth in the raw sense (i.e. seeing a company grow from 10 employees to 500).
The stock market has been corrupted into a place where wealthy investors make their mega-fortunes after companies have grown. Google's floatation valued the company $23 billion. Facebook's at $104 billion.
Pluck a few companies at random off the FTSE 100 - are these innovative companies that will help the UK grow out of recession? British Telecom, Barclays, British American Tobacco, G4S, ITV, National Grid...
Around the time of the millennium I worked for Motorola during the so-called dot-com bubble burst. Executives pressured departments to continue to hit unrealistic growth targets for the following five years. Why? Because that's what the market wanted.
But Motorola was a large company - over a hundred thousand employees when I joined, if I recall correctly. Yet it had investors wanting revenue growth; month on month, quarter-on-quarter, year-on-year.
Despite the tech bubble collapsing.
Any fool could see the growth market was tough. South east Asian rivals like Samsung and LG, strategic mergers like Ericsson and Sony. Plummeting revenue expectations from operators from cash cows like data and value added services (i.e. crappy WAP services to tell you e.g. the weather).
Shouldn't the company be focussing on consolidating, retaining customers and delivering on its customer commitments rather than fanciful growth?
I actually asked that question to the UK general manager. I was given a pretty angry response about me being too young to understand what investors wanted and should stick to my job as a technologist - a job I would be increasingly lucky to keep if I continued to question the corporate wisdom flowing down from on high.
Over ten years later and I look back on what became of my old employer and can't help but believe I understood the market far better than the majority of the corporate execs.
But they can be forgiven, for they had the wrong kind of investor!
Investors want growth
So why is it we're re-inventing the wheel with crowd funding? Why are we not instead reconfiguring the existing mechanisms - the stock markets - to make them attractive places for small growing companies to raise money to grow?
This seems to be such an obvious solution, but it would require a culture shift in regulation and investment banking.
Firstly everyone - investors, the regulators and the public need to accept that three in four companies will fail. This isn't as bad as it sounds, as the one in four that are successful can and do make huge returns for investors - enough to cover the failures.
The stock market seems an ideal place to spread the risk over these companies.
Regulation needs to be geared around managing - not eliminating - risk. And in many respects it is; well as far as entry criteria for "junior" markets such as London's Alternative Investment Market are concerned.
In fact the AIM has been criticised because of this 'casino' element.
But risk is inherent in all investment and it's so blindingly obvious I can't believe the hype around crowd funding has been allowed to grow for so long without anyone realising what these growing tech companies actually need is a stock market.
If crowd funding works as a concept, surely you can find some way of convincing the very same people - maybe offering similar incentives - to invest not in having their name on a meaningless list of founders but in having actual shares in the company. Shares they can sell if the company makes it to the big time.
But the fact so few software and technology companies look to markets to raise capital is noteworthy. Are the markets not well suited? Are the listing, transaction and nominated advisor fees disproportionately high?
Is public confidence so low and barriers for institutional investors so high that the stock markets don't offer technology start-ups a realistic prospect of success? Is it still seen as too complex for the 99.9% to open a brokerage account and buy shares?
But surely it's worth fixing the markets rather than inventing replacement wheels that aren't quite round and don't quite fit the vehicle.