From the editor: Paul Niederer, one of the top 10 global experts on crowdfunding throws light on how crowdfunding will evolve by 2020. Reposted from Paul’s blog.
Looking 6 years into the future, what can we expect crowdfunding to be in 2020.
Firstly, the word “crowdfunding” will have virtually disappeared: Peer to peer transactions will have become the norm. (Same thing happened with the term social networking. Thats just the way most people communicate now and few call it social networking.)
- Royalty based crowdfunding will draw business away from equity crowdfunding as computer systems can monitor and manage complex royalty disbursements
- Large companies will use crowdfunding extensively for R &D strategies and marketing. Several very large stand out verticals as in pharmaceuticals, green tech, clean tech, food processing etc
- Peer to peer business loans taking business from equity crowdfunding as credibility statistics will become the norm for entrepreneurs and valuation models like Equidam will become more sophisticated
- Debt-equity hybrids developed that are not burdened by securities legislation
- Lots of “linked campaigns” like Veronica Mars follow up. VM raised $5.6 million on Kickstarter, now they are contributing to charity with the deliverable (The Movie Launch) linked campaigns like go.omaze.com/r0Ji
Participants will be both larger and either non-geographical (universal) or local
- eCommerce players becoming established in the crowdfunding market
- Businesses outsourcing to crowdfunding platforms
- Women will be more successful than men due to being better at collaboration and social media
- Most campaigns will be either “local” or “non-geographic”. Meaning it will mostly depend on where the support community resides.
Looking at the actual raise process (Pre-raise, Raise and Post-rise) there will be more crowd involvement and more transparency.
- More transparency will be a pre-requisite
- Facial recognition authenticates parties relative to their internet history – or other identity management that will evolve which could include biometrics.
- Whistleblowing is the norm from the crowd and sites will centralise known data. We have seen with MH370 how the crowd picks up information from many different sources and in the end mission control has to recognise that the crowd needs congruent information. Lack of transparency is quickly sensed by the crowd.
- For some campaigns, crowd will determine rewards, assist with offering preparation and solve any issues before launch
- Rewards can be contrived by the pledger / investor rather than being specified.
- Two way negotiation can be built into platforms and a market for rewards may develop
- Cross-border equity crowdfunding raises focussed at accredited investors will be a new norm
- Most investor matching and documentation processes will be fully automated
- Strong communities will be built, developed during the raise and live longer than the raise itself
- Niche communities will build raises as a group
- Outcome monitoring is readily available as different services focus on what happens after the money is raised scoring both the entrepreneurs and the investors
- This participants performance history will be freely available with decisions being made much in the same way people do when they decide who to purchase from on eBay. The eBay “Feedback profile” is explained as “The positive Feedback percentage is calculated based on the total number of positive and negative Feedback ratings for transactions that ended in the last 12 months”. Crowdfunding project tracking will be a derivation of this.
A glimpse at the future … and it is all good!
Note from editor: Crowdfunding in Europe will be a main focus at the CSW Summit Brussels, June 5 & 6. Conference presentations and panel discussions will focus on equity and rewards based crowdfunding, with talks from Darren Westlake, Arnaud Burgot and Koen Panis highlighting euro regulations, legal implications and future prospects. Jose Zurstrassen, ace entrepreneur and angel investor will showcase a LIVE Crowdfunding Round with MyMicroInvest. Join us. View full agenda and registration information for CSW Summit Brussels.