Thursday, April 10, 2014

Crowdfunding 2.0: Successfully Funding Within An Ever-Changing Social Environment

One of the biggest challenges startups face is securing finances. Traditionally, growing companies look to venture capitalists or angel investors for the necessary seed money to expand their production capacities. Crowdfunding is a recent financing trend which enables companies and individuals to raise capital through “the crowd” – a large pool of ordinary backers – usually made available through an online platform.

Some examples of the more popular crowd-funding webpages include IndieGoGo and Kickstarter. Typically, firms looking for funding will offer discounted products or services in exchange for funding. For example, Pebble Watch, a smartwatch developed by PebbleTechnology, offered backers spending $115 or more a Pebble when they became available. After a single month of crowd-funding, Pebble was able to secure over $10 million of funding from approximately 69,000 backers.

Is there room for Crowdfunding 2.0: A new way fund within a socially secure ecosystem
Crowdfunding has been a huge success among the new-gen of socially conscious individuals who want to make a difference from the ground-up. One of the issues behind crowd-funding campaigns, however, is the lack of interaction between the drivers and their backers. People’s sentiments change over time as they are exposed to new information, products and regulations; it is very important for the campaign drivers to acknowledge these changes as they occur in real-time, in order to retain their backers and garner more support. This lack of communication causes all sorts of inefficiencies. New investors are susceptible to fraud after being duped by high-quality but ultimately false crowd-funding campaigns. For example, in a survey of 1,500 investors, the Ontario Securities Commission in Canada discovered that a majority of individuals wanted nothing to do with crowd-funding due to high-risk. This means that there is an inherent barrier towards accessing a larger pool of potential backers that can make the difference between the success and failure of a crowdfunding campaign. But who is to blame: the backers or the drivers? Neither. There is an apparent need for a go-between that can bridge the gap and bring forth a new potential.

votetrends, an online polling and social engagement platform built to record and visualize anonymous changes in individual sentiments on a variety of social causes, can partner with crowdfunding platforms to address this very problem - so as to provide a secure and convenient way to successfully crowd-fund in a new era of social consciousness.

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