A large majority of the angel investors and venture capitalists who took part in a Booz & Company study say they will not put their money in digital content intermediaries (DCIs) if governments pass tough new rules allowing websites to be sued or fined for pirated digital content posted by users. (DCIs are the companies that provide search, hosting, and distribution services for digital content such as YouTube, Facebook, SoundCloud, eBay, and thousands of others.) More than 70 percent of angel investors reported they would be deterred from investing if anti-piracy regulations against “user uploaded” websites were increased.
More than 80 percent of the angel investors would prefer to invest in a risky, weak economy (with the current internet regulations) vs. a strong economy (but with the new, more stringent proposed regulations on copyright infringement).
If the legal framework for digital content was clarified, and penalties on copyright infringement were limited for content providers acting in good faith, the pool of angels interested in investing would increase by nearly 115 percent.
Tumblr would not have been funded if it was trying to raising capital in the current regulatory environment.
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