Is crowdfunding going to change the world? I was delighted to take part in the first event at the opening of Virgin Hotels Chicago, where I joined a fascinating panel to discuss the nuances of crowdsourcing. It is an area that is transforming the way entrepreneurs can do business, and one I’m taking a keen interest in.
Crowdfunding isn’t as new as we think it is. One of the first examples of crowdfunding was when Paris gifted New York the Statue of Liberty, but did not provide anything to put it on. The people of New York ran ads in the newspapers to raise money to build a base for the statue. Crowdfunding has come a long way since then, but the principles remain the same.
The benefits of crowdfunding go way beyond the money. It brings market validation, access to new investors, promotion, community exposure, and real-time feedback. As well as the funds to start your business, it provides real connection with people who care about your business.
I met the founder of Indiegogo on Necker in its early days, and learned about his vision for crowdfunding. I particularly liked its non-profit element, as well as its commitment to creating positive change in the world. I decided to make a small investment in the company, and since then have enjoyed watching it and the crowdfunding sector grow. Since then I’ve come across dozens of projects on Indiegogo that have really excited me.
There are lots of wonderful ideas that are now getting the exposure they need to secure bigger investments, which is tremendous for the new generation of entrepreneurs. Like most things in life, crowdfunding success is much more related to how willing you are to pour yourself into the project with your heart and soul. You’ve got to have a great product, and then you’ve got to stand out from the crowd.
Back in the UK, Virgin StartUp has partnered with Crowdfunder to invite entrepreneurs to raise money for their projects, with Virgin StartUp then matching any money raised with one of their loans. If this is approved the entrepreneurs will then be matched with a Virgin StartUp mentor, giving their business the best chance possible to succeed. Three quarters of a million pounds are up for grabs as part of this innovative funding initiative – I can’t wait to see what new businesses come out of it.
The crowd is very good at ensuring the best projects rise to the top. It is also excellent at self-regulating so that the odd questionable project gets found out. Because you have to ask your loved ones, friends, co-workers – everyone you have ever met – to support your project, if it turns into a scam, you will not be very popular.
We were asked an interesting question about investing in emerging markets. They are growing much quicker than established markets, and people would be mad not to invest in emerging markets. Crowdfunding seems a smart way to do so. What’s more, you will be offering a chance to lots of exciting new entrepreneurs in emerging markets who may otherwise not get the exposure and funding they need.
How wonderful it would have been if Indiegogo had existed when I was 15 struggling to start a magazine, – I certainly would have used it. It is still early days, but I do believe crowdfunding could absolutely transform the world. Have you invested in a crowdfunded project, or started one yourself? I’d love to hear about it.