Over the course of the past five years, the crowdfunding industry has grown from a fringe phenomenon, allowing indie artists to monetize social capital, to a multibillion-dollar industry. Now, video game designers raise enormous sums to develop games well in advance of their release (Star Citizen), multibillion-dollar corporations look to crowdfundng campaigns for innovation and acquisition targets (Oculus Rift), universities fund ambitious research projects, including an unmanned mission to the Moon (Lunar Lion), and at least one SuperPAC has raised millions to end all SuperPACs (Mayday). Riding the wave, in 2012 President Obama signed the CROWDFUND Act (as part of the JOBS Act), allowing individual investors access to early-stage investment deals, an opportunity that has been reserved for the wealthy since the 1930s.
While the SEC has not yet published rules to allow investment based crowdfunding in the U.S. (and my company RocketHub continues to work closely with the SEC, FINRA, and members of Congress, to craft a safe and functional system for the American public), the last five years have most definitely heralded a new era of social funding. Here’s what you can expect in the next five years:
Look for giant online market places (Amazon, Ebay, Etsy) and payment processors (PayPal, Stripe) to incorporate a retail version of crowdfunding into existing market places. Don’t worry, that doesn’t mean crowdfunding campaigns will suddenly appear in your Amazon search results, but the flip side of fundraising is “partial purchasing” (allowing multiple people to join forces, pitch in smaller amounts, and together purchase an expensive item). A clear application for that bit of crowdfunding tech is gift registries. You’re getting married, but you already have enough pots and pans? No problem, register for an expensive leather couch, and allow your friends to chip in toward the big ticket item!
Case study: The Dodge Dart Registry
In early 2013, the Chrysler Group to created the Dodge Dart Registry. The site allowed users to customize their own Dodge Dart, and then leverage social media to raise the funds necessary to purchase the car. The initiative was an overwhelming success, yielding over 6,000 registries, 2,000 news articles, 70 million impressions, and a dramatic spike in sales of the Dodge Dart.
Now that crowdfunding has turned the corner into a mainstream fundraising mechanism, large corporations will actively look to incorporate the social ritual, and monetize the process. RocketHub has already been approached, and had a series of conversations with top advertising firms, universities, and government agencies (the U.S. Department of State, and the White House), about working together. The marketing budgets that large organizations bring to bear will continue the trend, fully popularize the ritual, and complete crowdfunding’s shift from “innovative maker tool” to an acceptable and exciting way to buy things online.
This article can be found on Forbes.com, written by Jed Cohen