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The Potential of Crowdfunding


Crowdfunding is one of the most exciting disruptions to traditional business and financial capital sourcing to emerge in the past 10 years. Typically understood as raising funds through various small donors via Internet campaigns and social media outreach, crowdfunding has incredible potential to empower artists and entrepreneurs.

A 2013 report by the World Bank cites the destabilization of markets during the 2008 financial crisis as the main driver in the growing interest in crowdfunding. The clamp-down in traditional sources of financial capital formation had created a vacuum. However, a new business model soon proved to be successful. The crowdfunding economy raised about $2.7 billion across various platforms in 2012 alone. According to Fortune magazine, the market is expected to reach between $90 billion and $96 billion by 2025.

Individual success stories have inspired a spike in young entrepreneurship and market creativity. Online platforms like Kickstarter, Fundable, and Indigogo have secured funding for many of the most exciting products of the past few years. Projects like the Pebble E-Paper Watch became one of the industry’s original stars by raising $10,266,845 in the first 37 days. Investors were excited by the prospect of being one of the first to own a new and independently designed smart watch. The production team received criticism for the protracted delivery timeline, but the potential of crowdfunding campaigns became evident.

Other crowdfunding campaigns have managed to leverage their products into multi-billion-dollar acquisitions. The Oculus VR is a virtual-reality headset that promises to put players into their favorite games. After it raised $2,437,429 in just 30 days, it eventually sold to Facebook for $2 billion.

Crowdfunding campaigns have also been used to change lives for the better. Tragedy can elicit incredible generosity from strangers, and crowdfunding has given people a way to facilitate connections between those in need and those who are willing to help. When a beloved toy store was threatened with foreclosure, an impassioned community dedicated itself to fundraising in a powerful and viral way. They managed to raise $82,452 in four days through 900 single donations.

In 2014, Oakland, California, Port Commissioner Bryan Parker used crowdfunding to finance his mayoral bid. By celebrating the intersection of politics and technology, Parker raised $60,000 in just 10 days. The accessibility and transparency in crowdfunding made the campaign popular among young voters.

The crowdfunding economy is still in its infancy. It’s not clear how the industry will evolve in the next decade, but the results it has displayed in recent years show incredible potential. It’s safe to assume that the reality of capital has changed permanently.

What is something you would like to raise money for through crowdfunding?