Crowd funding will surpass venture capital by 2016

[BiG StroOnZ]

                                                                           

 

If there is any indication that crowd funding has the potential to disrupt the world’s economies, it’s this. If current trends continue, crowd funding is going to provide more investment to businesses and projects in 2016 than venture capitalists will. That could have a real impact on how companies pitch themselves in the future, potentially leading to them marketing their project and products to consumers, rather than traditional investors.

 

To put it into perspective, the report from Massolution (via Forbes) looks at relatively recent history of mass-market crowd funding. In 2010, $880 million was pledged online to projects. In 2014, that total reached $16 billion and in 2015, we’re looking at more than $34 billion raised via crowd funding. In contrast, Venture Capital funding is around $30 billion a year.

 

Kickstarter is perhaps the most well known online crowd funding platform, but it’s certainly not the only one

 

But crowd funding is unlikely to stop there, as equity sharing programs are now being instigated and that is where there is the real potential for huge sums to be raised. If you thought people were happy to pledge a lot of money for some promise of a product and some basic rewards, imagine how much they’re going to be willing to put in to the pot if they think they might make a nice return on their investment.

 

It may also mean that crowd funding is used to drive VC investment, since entrepreneurs are more likely to want to put money behind a company that has already proven to be of interest to general consumers.

 

 

Source: http://www.kitguru.net/channel/jon-martindale/crowd-funding-will-surpass-venture-capital-by-2016/

 

First for those who are not familiar with the term, VC or Venture Capital or a Venture Capitalist 

1. Venture capital (VC) is financial capital provided to early-stage, high-potential, growth startup companies. The venture capital fund earns money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as biotechnology and IT.

     2. Venture Capitalist is an investor who either provides capital to startup ventures or supports small companies that wish to expand but do not have access to public funding. Venture capitalists are willing to invest in such companies because they can earn a massive return on their investments if these companies are a success.

 

Now this is traditionally the method you would seek to fund a startup but however now with the power of the internet there are other means to get investors and working capital for your company. Here we are seeing that through the power of the internet, via crowd funding campaigns, like from Kickstarter they have managed to match VC in 2015 and will surpass VC by 2016. This is quite a feat in and of itself. As mentioned above, the concept won't stop there either, you will eventually see equity sharing programs where after you "donate" money (typically large sums) you will gain share or equity in that company. So it won't stop at Kickstarter, since if there was a platform that allowed you to donate (contribute) while simultaneously gaining shares of the company (or equity) you will see much larger sums of money being thrown around because here we see people contributing money without any return on their investment (there are some things that you get from donating but not actual shares or equity) imagine what would happen if they actually could gain a return from their initial investment of the product they invested in, if it was to be successful. When this starts happening, you will see a large decline in the need for VC, this will also help people make tons of money (those involved in the equity sharing programs). This article claimed that Crowd Funding alone has the potential to disrupt the world's economies, I can only imagine what will happen when equity sharing programs begin to popularize on the internet.  

[Toddwjp]

just more proof that the rich are not vital to an economy, 

[winningsince1337]

I have a feeling a lot of uninformed people can and will lose life savings that they ignorantly poured into a shady investment. Scary stuff

[Toddwjp]

I have a feeling a lot of uninformed people can and will lose life savings that they ignorantly poured into a shady investment. Scary stuff

 

yep but the majority is small contributions to projects, just need to make sure that the campaigns etc are well moderated and laws are enforced when necessary 

[Solkia]

Crowdfunding is unreliable. Move in on investors? sure. Surpass them? Highly doubt it.

[BiG StroOnZ]

Crowdfunding is unreliable. Move in on investors? sure. Surpass them? Highly doubt it.

 

Did you even read the article?  :huh:

 

VC is 30 billion a year, Crowd Funding this year is over 34 billion.

[bogus]

just more proof that the rich are not vital to an economy, 

Funded projects doesn't mean successfull and profitable projects.

If they would compare how many Kickstarters simply become flops, even at the conceptual level some would never work - some I would even call scams -, to the projects funded by VCs... maybe we would see the "reality" of these numbers.

[Toddwjp]

Funded projects doesn't mean successfull and profitable projects.

If they would compare how many Kickstarters simply become flops, even at the conceptual level some would never work - some I would even call scams -, to the projects funded by VCs... maybe we would see the "reality" of these numbers.

 

true but the issue with venture capitalists is we don't know how many of there investments fail either, not saying we dont need both just using this as an example for why trickle down economics is BS

[Revinval]

Except many businesses that are not flashy and kickstartable will lose out if VC stops. The rich are required when someone with a sound business model and product comes along that isn't going to excite anyone. I for one would rather have smart investors with lots of their own money at stake rather than companies that want funding, abuse or adjust just for crowdfunding money.

[Bouzoo]

I knew it was big, but this big? Hell I gotta try and launch something.

[RagnarokDel]

I wonder how much of crowdfunding is done by venture capitalists

[Misanthrope]

I have a feeling a lot of uninformed people can and will lose life savings that they ignorantly poured into a shady investment. Scary stuff

 

Well, you just described the good old stock exchange and wall street.

 

No the real problem is that crowd funding actually guarantees you will never see any returns, because you aren't entitled to them. You're a good will contributor who donates, not unlike a charity but for shitty indie games and shitty indie bands.

[BiG StroOnZ]

Well, you just described the good old stock exchange and wall street.

 

No the real problem is that crowd funding actually guarantees you will never see any returns, because you aren't entitled to them. You're a good will contributor who donates, not unlike a charity but for shitty indie games and shitty indie bands.

 

I think he was referring to online equity sharing programs. Where the difference between those and kick starter would be that you would actually gain equity after making your donation or contributions.

[Deletive]

There is a certain place for Crowd funding, and other places for venture capital. I don't think one can surpass the other when they play different roles for different companies. Crowd funding can't fill a fair roll in start up funding. 

Yes it may play a bigger role but sometimes over-saturating market with the same idea.

Eventually it make surpass it but it doesn't mean Venture capital is going to not exist, It'll still live on for those ideas that don't have projects, software that are directed to consumers.