Crowdfunding a new way of financing

If you want to create something but you don’t have the money to make it. Then crowd funding is your answer. Website like Kickstarter and Indigogo allows creators to post there ideas and ask for funding. In return the funders often get special perks for funding the project for example early access or a limited editions. These projects can get enormous of amount of funding. Like the pebble smart watch, that was funded for more then 20 million American dollars. There is however a downside to crowdfunding. There is no guarantee that the project will ever launch and then there is very large possibility you never see the project and your money ever again.

 

Crowdfunding is a trend that has a huge impact in how companies work. Where ones you were reliant on producers/production groups who gave you a budget. If you do not have the money you cannot make your product. With crowdfunding a groups/individuals can post their idea where people can invest in the product before it’s even made. This allows for more creativity on the market as you’re not bound to Production Company’s. If you browse trough kickstarter you will see many kind of different product for the masses but also for the niches that couldn’t get money the traditional way but where there are still plenty people who are willing to invest there money in.

 

Crowdfunding places itself as a meso-trend. Crowdfunding falls in the movement of individualisation and the changing financial sector where ones everything was ruled by gigantic company’s. Now you see the up rise of small start-ups with new ideas. With crowdfunding they can finance these ideas with out the big company’s watching over their shoulders.

 

Crowdfunding has spawn many trends as the smart watch, the Ocules rift, pebble (smartwatch) and many more. A lot of these products couldn’t find funding elsewhere to make their product. But by posting it on website’s like kickstarter they managed to get enough money for making and financing their ideas. Many of these products became trending where big company’s started following the hype and making there own versions to compete. Social media is also a very important vector by spreading and getting interest in their idea more and more people while notice and help the funding.

 

Crowdfunding has been a thing for a long time but the last few years it has grown exponentially. This happened because of smaller trends fueling it. When kickstarter was relatively new  many people hadn’t yet heard of it. Until campaign like for the smartwatch pebble started. These campaigns got a huge amount of media attention and raised a ton of money. And suddenly everyone one wanted in on the success. And more and more start-ups and individuals started putting their project on crowdfunding site’s since then crowdfunding has become a common way of funding a project. It doesn’t appear to slow done and more and more projects are post on funding sites. Some project even get more then 100 miljoen in funding. What in turn makes crowdfunding more and more appealing. There is are downsides however as projects sometimes get huge investments and then suddenly disappear form the world and you will never see the product and the money ever again. This may make investing less appealing. Their is also is no return money some offer funders the product when they pay a certain amount or something extra. but people that just give a small amount will never see a return in the money they spent unlike investing in stocks. So you are reliant of the goodwill of people that want your product on the market even if they don’t earn any money from it.

 

So is crowdfunding a viable systems that will continue on forward and grow. Or will the failing projects and the fact that people can’t earn any money from their investment be the downfall of crowdfunding?

Hidde Pluim

APA

(n.d.). The Basics of Crowdfunding. Retrieved September 06, 2016, from https://www.entrepreneur.com/article/228125

 

Zipkin, N. (n.d.). The 10 Most Funded Kickstarter Campaigns Ever. Retrieved September 06, 2016, from
https://www.entrepreneur.com/article/235313

(n.d.). Register for a trial to explore Warc further. Retrieved September 06, 2016, from http://www.warc.com/Content/ContentViewer.aspx?MasterContentRef=6ac891e9-17fd-43de-9856-cd469f69c978

 

Kickstarter. (n.d.). Retrieved September 09, 2016, from
https://www.kickstarter.com

 

14 Questions & Answers on Crowdfunding. (n.d.). Retrieved September 09, 2016, from
https://seraf-investor.com/compass/article/14-questions-answers-crowdfunding \

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One thought on “Crowdfunding a new way of financing

  1. An interesting topic. The main problem is the way you refer to your souces in the article. APA is more than a source list at the end of an article. You need to show in the text where you use which source. This will improve you line of reasoning, which now comes across more as your own opinion, than as arguments supported by sources (eg when you say that it has grown exceptionally, I want to know on what source(s) you base this on). Also you can be a bit more explicit in answering the questions (where is it in the life cycle, why is it a mesotrend, etc). But you do address the right topics and I don’t see problems with understanding the theory. So use these comments to improve you next articles.

    Like

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