As part of On Purpose I’m working at JustGiving on Yimby, their new crowdfunding community. Crowdfunding in the US is a much more crowded marketplace but the UK has it’s fair share too. From rewards based creative sites like Kickstarter, Indiegogo, FundIt to social good and civic ones like Crowdfunder, Spacehive and Yimby, to equity based sites like Crowdcube and Seedrs. There are even niche platforms like StudentFunder. Here’s a pretty comprehensive list.
In 2012, crowdfunding portals helped small business owners and individuals raise about $2.7 billion. According to Massolution (which tracks the market) that figure was set to double in 2013. Was the recession and the government’s budget cuts the catalyst for this rapid growth, or was there a movement to create more good in the world? I hope it’s the latter.
There are now several banks and big brands even getting behind crowdfunding. Seeds.nl is a crowdfunding pilot launched last year by the Dutch bank ABN AMRO’s innovation platform, Dialogues Incubator. Seeds.nl invited interested parties to invest a minimum of 50 euros in five companies contributing positively to society – GreenGraffiti, Greenjoy, On The Ground Reporter, We Beat The Mountain and Yuno. The four-month pilot saw 3 companies out of 5 being successful.
Philips used Indiegogo last year to launch a competition where entrepreneurs battle for money for their product ideas. To be eligible for the $60,000 grand prize they had to reach a certain level of their funding goals.
In order to get a picture of the crowdfunding environment for 2014, Devin Thorpe in his Forbes article, spoke to some of the most prominent leaders in the crowdfunding world for causes and mission-driven businesses (in the US). Here’s my top 3 from the 10 he’s covered.
Rapid growth of crowdfunding will continue.
Amanda Barbara of Pubslush observes, “Crowdfunding overall is on the rise, driven in large part by entrepreneurial, artistic and philanthropic ideas. [My] prediction is that this growth will continue at least at the current rate, if not faster.” She goes on to say that Crowdfunding began its exponential rise around 2009. Google Trend data shows a correlating steady rise in social good beginning at the same time.
More people will make meaningful philanthropy part of their lives.
Robert Wolfe, CEO of CrowdRise, predicts, “More and more people will make meaningful philanthropy a part of their personal narratives on Facebook, in school, on CrowdRise and really in everything they do — not solely because the world is an increasingly selfless place, but because people recognize that giving back is cool and thirst for the experience of participating in something that’s fun and feels good.” He explains the driver, “Giving back isn’t just transactional anymore and it’s not just about making a donation. It’s about engaging, participating and being part of a movement.”
Crowdfunding will democratize philanthropy.
Lesley Mansford, CEO of Razoo, predicts that, “Amplified democratization of giving [will] make it easy for everyone to be an everyday philanthropist. Younger generations, especially millennials, are getting more involved with social good and philanthropy, and commonly prefer online giving through crowdfunding making technology critical to bringing generosity into the next era.“
It’s really interesting to see that banks are engaging in this marketplace to add crowdfunding into the mix alongside their core business. The financial crisis and capital requirements placed on banks made it much more difficult to offer funding to businesses and individuals. And the banks don’t want to lose out.
Danae Ringelmann Indiegogo’s co-founder feels brands are getting involved as “these campaigns let brands engage with their customers rather than just treating them as a transaction. The customers feel like they’re working alongside the brand to make something happen.” Or it’s a clever form of CSR to get the punters to help pay.
Crowdfunding isn’t just about the money as the 3 points above highlight. It’s about engaging, participating and perhaps most importantly being part of a movement. Will the sites which foster this spirit the most succeed…..we shall have to wait and see.
Crowdfunding empowers individuals to do social good in their communities and could help ease the pressure on government and councils to fix things. So perhaps one day our taxes could reduce and reliance on local government – a utopian ideal. Power to the people!