Wednesday, May 12, 2010

Morning Read: The rise of ‘crowdfunding’

The rise of “crowdfunding”: Arguing that the existing venture capital model is broken, Entrepreneur Kevin Lawton provides an introduction to “crowdfunding.” The idea is that traditional methods of screening investments aren’t working well (such as relying on human networks), so VCs need to rely on the wisdom of crowds to pitch in and drive consensus–the direction a number of other industries seems to be moving in. GrowVC is an early example. “As it matures, crowdfunding will become the norm,” Lawton says, “and span many business disciplines and multiple rounds.”

Say No to VC tax breaks: Credit peHUB’s Dan Primack with an excellent, and more importantly intellectually honest and non-pandering post about venture capital tax breaks. At a time when everyone seems to think they deserve lower taxes no matter what their salary and there’s little sense of shared sacrifice, it would’ve been easy for Primack to go with the flow and endorse the industry’s conventional wisdom. Instead, Primack picks apart the rationale for preserving the tax break and calls out what it is: a loophole that for little reason taxes capital gains at a far lower rate than other types of profits.

Medicare “cuts” to some are “savings” to others: One in five Medicare hospital patients returns to the hospital within 30 days–at a cost to Medicare of $12 billion to $15 billion a year–and by 90 days the rate rises to one of three, writes Maggie Mahar. A portion of that represents potential savings to the federal government, and that’s why it’s encouraging that the health reform law cuts Medicare reimbursements to hospitals with particularly high rates of avoidable readmissions.

Reform cost estimates go up: More bad news for reform advocates (and good news for those looking for more to fodder to complain about Obamacare)–the Congressional Budget Office estimates that the health reform law will cost $65 billion more than previously thought.

No annual meeting for you: Already unpopular with the FDA, investors and the Justice Department, device maker Boston Scientific can add antagonist to the list: the media. The company barred the media from its annual meeting, despite having let reporters attend in the past. A spokesman then declined comment as to the reason(s) why. Not exactly the corporate transparency that seems to be all the b-school rage these days.

Get out of the stock market: That’s the advice from Reuters’ excellent financial reporter Felix Salmon in the wake of last week’s meltdown and bounceback. “We are entering an era of massive volatility,” Salmon says. “You, as an individual investor, just simply don’t have the risk appetite to be able to deal with that kind of volatility.”
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