Wangari Kamande is a Research Analyst at Social Media Group.
Have you ever had what you thought was a really awesome idea, business, hobby or otherwise that you would have loved to bring to life but the thought of raising the money to execute made you want to take a very long nap and just dream some more? Well, that does not have to be the case anymore.
Social media and the Internet have made it much easier for people to access financial resources, talent, customers and everything in between to move a great idea into reality. The backbone of this process is in Crowdfunding. Crowdfunding has been described the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the Internet, to support efforts initiated by other people or organizations.
This idea is really not that new, communities have been pulling resources together for charity, to develop community projects such as schools or theatre for many years. In fact, growing up in Kenya I was raised to value the Harambee spirit which literally means “all pull together” in Swahili. This is a Kenyan tradition of community self-help events, e.g. fundraising for development activities and is also the official motto of Kenya and appears on our coat of arms. This was how the country was able to develop the community post-colonialism.
Today, there are quite a number of crowdfunding platforms in the non-profit sector there is Lendforpeace, Microplace, Kiva (my personal favourite) etc while in the for-profit sector there is Indiegogo, WeFund, Kickstarter just to name a few.
Here are few interesting facts on crowdfunding platforms:
- According to Gartner research, in 2009 the estimated value of money generated from crowdfunding platforms was $1.6 billion. The forecasted value of the same is expected to be $6.2 billion in 2013.
According to an infographic commissioned by pleasefund.us:
- The biggest crowdfunding platforms are located in the United States and the UK.
- 49% of all sites that use crowdfunding are for creative purposes, not social or business for the most part.
- One of the best crowdfunding success stories is the Nano Wrist Watch which received $942,578 for its Kickstarter Campaign, which is 6300% of the $15,000 they asked for.
- 2011 has seen the highest number of crowdfunding platforms launched ever, with a whopping 67 sites compared to in 2007 when only 19 sites were launched.
In my opinion, there are three factors that have and will continue to stimulate the growth of crowdfunding platforms, this include:
1. High Speed Internet and Social Media
This has allowed for people from all over the world who have similar interests and passions to connect and build communities. In fact, while there are varying statistics on how much of funding comes through social media connections, crowdsourcing.org (the leading industry resource on crowdsourcing and crowdfunding has described social media as the cornerstone from which crowd funding is built on.
2. Online International Payments
The ability to make secure online payments with a credit card and even debit card means that money can travel across borders. People can now come together and support ideas, projects that would otherwise not be funded through traditional means e.g. bank loans or venture capital.
3. Macro- Economic Policies
In early April, the US president signed a law called the Jumpstart Our Business Startups Act (JOBS). In summary, this allows small companies to raise up to $1 million in equity on an annual basis through crowdfunding, without having to go through the rigorous disclosure process by the Securities and Exchange Commission.
For anyone looking to get that dream idea up the pipe, spend time building your social network and community, build trust, provide relevance and engage consistently. Your dream idea could be a tweet away…literally.