Crowdfunding Industry Disruption
At a size estimated to be between nearly $4 billion and some estimates indicate up to $300 billion, the crowdfunding market is a game-changer. Innovative companies are using crowdfunding for new ways to self-finance of course.
Peer-to-peer lending platforms such as Prosper, Lending Club and Funding Circle are also providing consumer and small business credit where banks and other institutions are no longer taking as active a role.
Real estate crowdfunding is a tool useful in financing endeavors such as build-to-suit, distressed property re-hab, and strip mall renovation. Check out Groundbreaker, Crowdstreet, and RealtyMogul to see the full ray of projects that are crowd-financeable.
And crowdfunding isn’t just about raising capital for businesses to start and grow, from small investors. It can also be used by large finance organizations to tailor new lease products via crowdfunding for small businesses that were not possible before. Think of all the equipment that needs to be financed in the computer / IT industry and manufacturing.
But Crowdfunding is also being harnessed for more than financing. Big brands like Nike and Mastercard are using crowdfunding to generate brand buzz and social media activity, which is also fairly expected. But according to Sherwood Neiss and Jason Best at Crowdfund Capital Advisors, these companies are also leveraging crowdfunding as a channel for product design, customer insight, and customer loyalty.
Product design is the focus of the innovation platform Christie Street and Crowd Supply along with the financing aspect. These platforms offer vetting, mentorship, and some guarantees for investors.
Creating customer loyalty via ownership is a new way to attract and retain loyal customers, and convert them into loyal investors. Loyal3 is a marketing firm/securities brokerage house who offers a disruptive social platform for companies to do just that. Loyal3 carried out its own IPO via Facebook, accessing loyal customers and influencers easily via social, creating buzz for the brand and the IPO itself.