Is the future of funding moving toward or away from the crowd?

Here are some thoughts on the future of crowdfunding.

future of crowdfunding

Personal projects of interest and startups have typically had a difficult time convincing banks to loan money on an idea. This barrier to getting a project or invention funded has created a method of raising funds called crowdfunding. Most people have heard of the term crowdfunding, but some do not know exactly what it is or how to do it. This post deals with the future of the crowdfunding model. Another post that explains what is crowdfunding can be found here:

Alternate funding

It wasn’t that long ago that crowdfunding was considered an alternate funding source for the tech savvy. Within the last few years, the crowdfunding model has become a mainstream source of funding for a startup or personal project. With the downturn in the economy is 2008, banking regulations have curtailed access to small business loans. Estimates show that over 70 million people to date have used crowdfunding as a source of alternate funding.

Countless stories fill the internet about successful crowdfunding campaigns. Most of these campaigns are brought to the for-front of the media because of their huge numbers and high profile. However, recent numbers show that the average crowdfunding campaign is around $7000.00. This means that a lot of smaller campaigns are having success with this relatively new financial model.

Niche market

This statistic alone suggests an eventual split between personal campaigns and business campaigns. The future of crowdfunding will include the niche market for funding acquisition.  Specialty platforms catering to real estate, the arts and film making, and science and technology are just a few of many niche crowdfunding markets. A large portion of the major platforms in the crowdfunding field are specializing in very specific types of funding.

This splintering and specializing of funding options will drive new innovation to the markets. This will result in the exponential growth of crowdfunding due to much more options being available to the investor than before.

All inclusive platforms

On the other side of the equation, all inclusive platforms will see growth as a one size fits all funding option. These types of crowdfunding sites will flourish as there will always be a need for a special type of funding. The need for these platforms will grow because of the demand for their services. Visiting one platform to conduct a campaign is an attractive lure for creators. An additional plus is the backers that invest in these inclusive platform campaigns want to diversify. These platforms provide that option.

Relaxing of regulations

Going forward, a whole subset of support business are emerging. Marketing companies that specialize in crowdfunding to investment firms that want in on a new project. People go where the money is and the money is in crowdfunding. With equity investment in startups for unaccredited investors (investors that do not have to satisfy requirements by the Securities and Exchange Commission ) available, the opportunity to by a stake in the startup is now available to everyone. Due to several changes in the law, not only investors can reap these benefits but company’s can gain access to crowdfunding funds previously not available.

The Crowd-sourced funding for proprietary companies allows businesses to fast-track equity crowdfunding fundraising.  Eliminating the need to convert to unlisted public company status. What does that mean. It just got easier to raise funds through a crowdfunding campaign for a business.

This trend is likely to continue throughout the crowdfunding industry. The trend of less regulatory hindrance when company’s want to take advantage of equity crowdfunding.

Saving time and resources for any company is a huge boost to the concept of crowdfunding. Whether you are starting a small personal campaign or driving funds for your latest invention, crowdfunding is a economical option that cannot be overlooked.

Which platform?

This type of financing will develop and change over time. The regulating bodies have looked at this financing concept and have given crowdfunding the green light. The platforms like Kickstarter, Indiegogo, and are legitimate and a major source of funding for crowd-sourcing an idea or project. These crowdfunding platforms work for personal projects and for businesses needing to acquire funds.

Crowdfunding has been around a long time, and is only going to grow as more people embrace the concept.  What is the future of crowdfunding?  If trends continue as they are, the future looks very bright for crowdfunding.

And the crowd just keeps getting bigger.