Tim Aldiss writes for Shadow Foundr – don’t just follow the crowd, follow experienced investors.
2016 was in many ways a turning point for crowdfunding. It changed from being an occasional source of cash for charities, very small businesses, one off events and private individuals and instead started to become a method of choice for many well known enterprises. This was something definitively highlighted in the recent Crowd Invest Summit in LA.
Findings from the Crowd Invest Summit
At the closing panel of this summit, a broad range of crowd funding experts such as Katherine J. Blair and Silvia Davi almost unanimously agreed that the crowd funding market is going to expand throughout 2017. This is, the panel acknowledged, largely due to the high degree of success that entrepreneurs and startups have experienced with crowdfunding. As we enter 2017, there are numerous new businesses that are now thriving almost solely due to crowdfunding campaigns that they launched back in 2016.
This has made larger and more established enterprises prick up their ears as they think about ways to diversify their own sources of funding.
As the panel highlighted, crowdfunding is something that we can understand not just from the perspective of SMEs but also from the perspectives of individual investors. For investors who want to feel empowered and to explore options that are not the traditional stocks and shares investment route, crowdfunding can be an excellent choice. Simply put, many individual investors like the more personalised feel that they get with a crowdfunding initiative and the strong links that they can build up with startups.
Crowdfunding also offers some unique and personalised perks for investors, including opportunities for valuable signed merchandise, meet and greet events and exclusive VIP tickets.
2016: a year of education
It also needs to be acknowledged, the panel noted, that 2016 has been a significant year for educating investors about the need for caution when it comes to investing via crowdfunding platforms. 2016 saw several enthusiastic investors plumbing money into projects that did not really get off the ground.
Some crowdfunding platforms do provide safeguards for this; for example GoFundMe has a feature which gives potential investors their money back if a certain minimum financial target is not met. But, these safeguards cannot protect against projects that meet their financial targets but fail quickly afterwards, having taken investors’ money. As such, we can expect the crowdfunding investors of 2017 to be more cautious, experienced and wise about where they put their money.
What will crowdfunding look like in 2017?
One significant thing that can be said with confidence about crowdfunding in the new year is that there will be much more of it. We can expect to see a much wider range of businesses and entrepreneurs turning to crowdfunding platforms to achieve their goals. In addition, we can expect (or, rather, hope!) that those who invest in these projects via crowdfunding in 2017 will have learned how to invest more wisely after 2016.