How Crowdfunding Is Changing the Financial Ecosystem—for Good
Just as social media has democratized communication—thereby catalyzing revolutions like the Arab Spring—so too has crowdfunding democratized fundraising and catalyzed the evolution of people-powered finance.
Five years ago this January, my business partners and I launched Indiegogo, a global crowdfunding platform. Our task was as large as our goal was simple—to empower absolutely anyone, anywhere in the world to raise money for whatever they were passionate about. By pooling a number of small contributions, people who would not have been given the opportunity in previous centuries could suddenly do extraordinary things.
Our intention was to remove the arbitrary gatekeeper, put the power of funding into the hands of the people, and make fundraising fair and efficient for everyone. What we didn’t realize, however, was that we had started a movement to fundamentally change finance, for good.
Crowdfunding is not only permanently changing the financial ecosystem, it’s changing it for the better too.
With entrepreneurial, cause, and creative ideas now coming to life every day due to people voting with their dollars (for ideas that would have been DOA just five years ago), crowdfunding is securing its place in finance by becoming an incubation platform for traditional financiers (lenders/angels/venture, foundations/grantors and creative studios/labels). Entrepreneurs like the makers of Swivl and Emmy’s Organics are raising venture investment and securing bank loans, respectively, after proving market interest with their successful crowdfunding campaigns. Community activists such as comic blogger Matt Inman are attracting matching government funding for public projects like museums by proving—with a successful campaign—that people want these projects to happen.
As a result of crowdfunding’s emerging incubation nature, the role of the traditional financier is shifting from gatekeeper to amplifier. As the decision-making power of what to fund or what not to fund no longer rests solely in the hands of a few individuals or entities, and instead in the hands of the people benefiting from those ideas, then everyone wins. Specifically, the risk/return prospects for financiers improve, and more community-validated businesses, causes, and artists get off the ground. It’s when everyone wins from a change, that the change becomes permanent.
So what the world now shares is the opportunity, or rather, the responsibility to fund what matters. A world that works for 100 percent of humanity is a world funded and created by humanity. So let’s gogo. There are never too many good ideas to make happen.