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Indiegogo? More like Indiestopstop, local startup says in suit
By adamg on Tue, 04/28/2015 - 2:49pm
A BU spinoff that is selling panels in a centralized solar farm is suing crowdsourcing site Indiegogo after the site blocked its campaign, the Boston Business Journal reports.
CloudSolar had raised nearly $450,000 in pledges before Indiegogo decided to halt the campaign and refund all the money, the Journal reports.
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Comments
panel owners would receive 80
This sounds like an investment vehicle and not a donation or sale of a solar panel. As such, there would need to be a filing with the states in which the investment was being solicited.
The "Jobs Act" provision for raising investment through the sale of equity is not yet in effect, but still under review with the Securities and Exchange Commission (SEC.)
CloudSolar = A+ in engineering, F in reading comprehension
I just read the Terms of Use over at Indiegogo, and read CloudSolar's campaign proposal, and it sure as heck seems like they broke a very plainly written rule:
"Campaign Owners are not permitted to offer or provide any of the following as a Perk: ... any form of financial incentive or participation in any profit sharing..."
That's exactly what CloudSolar is proposing to do. Contributors buy panels (aka non-voting shares) in a not-yet-existing solar farm. In exchange for helping to capitalize the project, contributors get 80% of the yearly revenue generated by their panel (aka dividends from their share).
Why these guys couldn't raise money through regular venture channels is beyond me...unless they didn't want to share any control with partners and figured they could just do the whole thing without the sort of business expertise that good VCs offer new enterprises.
In which case - given the added expense in time, attention and money it will take to sort this out - hopefully they've now learned a lesson or two about business hubris.
They approved it before they rejected it
I'm not sure how Indiegogo works but they did approve the campaign and allowed to it collect 1/2 a million before suddenly deciding it broke their terms of service.
The onerous is on crowd funding site for them to police their postings or at least put a hold on them before they reach such high valuations. It sounds like someone didn't like the solar panel idea and called indiegogo who in turn found an excuse to close the campaign.
Or CloudSolar changed the project description
or wrote one thing on their application and another on their campaign page (both of which occurences apparently happen fairly regularly).
But in any case, the Terms of Use are pretty clear, and although I mostly agree that IndieGoGo should be more on top of this sort of thing, I'm pretty sure it's up to the 'campaigners' to comply with the rules governing use of the service in the first place.
The subscribers get their money back, so the only ones harmed here are two guys who didn't read a one page document closely enough. And that harm is probably temporary, if their idea is as clever (and viable) as it appears.