We are a consumer electronics business that completed a successful crowdfunding campaign which jumpstarted our business. However after some months, our manufacturing expenses are very high and we have started to look for investment options. We have some offers from VC's, but we are not sure if they will be a good fit for a hardware startup. Is giving away equity to crowds of people a sane thing to do? Has anybody been in this situation or has experience in it?
It's hard to evaluate a tactic (equity crowdfunding) without knowing if your business strategy is sound. That said, the equity crowdfunding platforms I'm familiar with are far different than the typical Kickstarter-type, rewards-based platform you may have used initially. On Indiegogo or Kickstarter, you truly are marketing yourself and your product(s) to a crowd, and most projects make their money from the small donations of many, many individuals. On a site like Fundable.com, you're generally dealing with a handful of accredited investors who are expected to pony up tens of thousands or even hundreds of thousands of dollars each.
A successful crowdfunding campaign can be as valuable for the publicity it generates and the tribe you build as for the money you raise. Whereas an equity fundraise may be done entirely behind the scenes, so you don't really get any PR benefit until and unless you meet your goals and announce your new partner(s) or owners.
Once you decide what's most important to you (control, independence, cash flow, distribution channels, SEO issues, publicity, etc.), you'll get a better grip on equity crowdfunding as a fundraising tactic and whether or not it's right for you.
If you'd like to brainstorm or reality-check with an independent outsider who has experience in both kinds of crowdsourcing, do consider me a resource.