Crowdfunding, giving new opportunities to everyone.

Since a few years, http://www.kickstarter.com and many other similar websites made it possible to collect all the money you’ll need for your project to start, without having to leave your house. You simply put your idea up on one of the platforms and wait for people who are willing to donate or invest in your idea. With 469 new projects launching every day, and new platforms popping up all around the world, the crowdfunding movement became one of the fastest growing trends of these last years. According to the UK based National Society for Science and the Arts, equity crowdfunding even doubles in size every two months and even in a small country as The Netherlands, crowdfunding raised over 128 million in 2015.

Now you might ask yourself, how is this possible? What makes the concept of crowdfunding such a succes? What are the advantages and what does it differently than current capitalism? First of all, crowdfunding gives people opportunities that banks couldn’t give them. Helping small businesses and startups to get on their feet is a big risk for banks who aren’t sure about the prospect and that’s why they fail to help so many people with great ideas. That’s also why crowdfunding can help reducing failed enterprises, because people get the opportunity to test the interest in their idea without the risk of losing all their invested money. You offer an idea to a crowd, and when your project turns out to be under-funded you’ll know that it isn’t ready for the market yet.

One of the other things that is making crowdfunding a success is that it gives people the opportunity to contribute in the development of their interests. Think about science, art, games, health, music and medicine. All these people who invest may not be rich, but are willing to spend their money to help making the idea become reality. And in no other form of capitalism can the invester be such an important part in whether this idea gets off or not.

So within these last years crowdfunding already brought change in the financial world, and gives both investers and inventors influences and chances they didn’t had before, and that’s what makes crowdfunding a (meso) trend. I think the crowdfunding trend is still in it’s growing phase because there is still so much development going on. New platforms still pop up and the government is creating new laws for regulation. This trend is most likely emerged from bigger trends like digitalisation, social marketing and personalization.

In the future I think crowdfunding might become more commercial. Think about more entertainment shows that involve pitches for funds, like the show Shartank. Or think about the huge live fund-raising events where celebrities contribute to help gather money for people in need. These kind of shows are the beginning of crowdfunding expending outside the web. The one thing that is certain now is that this trend will continue to grow. In these last years more and more money has been spend on crowdfunding and that is also going to make it more appealing for bigger companies to participate.

And even though crowdfunding is such a succes, a lot of people are holding back because they are aware of the risks. There are a lot of politics who are claiming that crowdfunding has a lack of transparicy and that crowdfunding can easily be used to mislead investors. To protect people from these kind of risks, politics all around the world are creating new regulation laws and designate financial regulators. I suspect that once the crowdfunding movement is more regulated even more people will participate which will lead to even more impact on financial distribution.

 

Monique Wols

Reference list:

Hampden-Turner, C. and Trompenaars, F. (2016). Retrieved 8-9-16, from http://www.warc.com/Content/ContentViewer.aspx?MasterContentRef=6ac891e9-17fd-43de-9856-cd469f69c978&q=crowdfunding&CID=A106950&PUB=MKT

Hupkens, J. (2016). Crowdfunding in 2015: 128 miljoen opgehaald, weer een verdubbeling. Retrieved 8-9-16, from http://www.nrc.nl/nieuws/2016/01/02/crowdfunding-in-2015-128-miljoen-opgehaald-weer-een-verdubbeling-a1494097

Klinckenberg, J. (2015). Crowdfunding: kip met gouden eieren? Retrieved from 8-9-16, from https://www.consumentenbond.nl/hypotheek/crowdfunding-kip-met-gouden-eieren

Ponten, H. (2015). Lecture 2: Trends and Brands [PDF document]. Retrieved 8-9-16, from https://cursussen.sharepoint.hu.nl/FCJ/97/JDEETRENDW.3V/Course%20materials/t%20and%20b%20class%202%20block%20A%2020152016.pdf