When it comes to modern crowdfunding, it’s safe to say we’re not in Kansas anymore, Toto.
From a niche outlet for creatives to a multi-billion dollar industry, crowdfunding has gone through significant changes over the past decade. Here are five bold predictions about the future of crowdfunding that could prove to be surprisingly accurate – or completely wrong.
1. The “Big 2” becomes the “Big 3”
No, not that Big 3. But at some point in the next five years, a powerful challenger will emerge to compete against Kickstarter and Indiegogo for crowdfunding dominance. Crowdfunding is a $16 billion industry and growing rapidly, so there’s definitely room for a 3rd player at the table.
Kickstarter and Indiegogo have a huge head start, so any new crowdfunding site would need significant financial backing from a huge, well established brand in order to compete.
Somewhere Jeff Bezos’s ears just perked up.
2. Corporations get in on the action
Crowdfunding used to be a way for Joe Shmoe to share his product idea with the world. And it still is. But soon, “The little guy” will have company from some of the biggest corporations in the world. They see crowdfunding as a great way to test out potential new products without a costly full-scale product launch.
Rather than crushing individual entrepreneurs, this change will likely bring crowdfunding platforms scores of new customers. People who these traditional brands have sold to for years. As they say, a rising tide lifts all boats, so this spike in new traffic should benefit both existing creators and current crowdfunding fans alike.
3. Indiegogo continues evolving
Like a pre-teen going through puberty, Indiegogo is experiencing a lot of confusing changes right now. Their recent foray into Initial Coin Offerings (ICOs) is a sign of things to come as they shift their focus away from traditional crowdfunding. Indiegogo’s Marketplace, which features products that are ready to ship, is far more like Amazon.com than Kickstarter.
4. Equity crowdfunding explodes
Everyone obviously would have loved the chance to become an early investor in Uber, Airbnb, or Netflix. But for those of us who aren’t lucky enough to live in Silicon Valley – or have millions of dollars sitting around in the bank – we rarely get the chance to channel our inner Shark Tank.
Equity crowdfunding let’s just about anyone invest in early-stage, private companies in exchange for a percentage of ownership and dibs on future profits. It lets individuals 18 and older get in on the action for a much smaller upfront investment than is traditionally required from angel investors.
5. Crowdfunding insurance takes off
Fast forward to February 2021, and Geico just ran a Super Bowl commercial promoting their exciting new coverage option. “15 minutes could save you 15% or more on crowdfunding insurance. Back any project, and you’ll get a full refund if they don’t deliver!”
While the majority of successful crowdfunding projects do deliver the promised product, it’s a safe bet that many backers would pay a small premium that guaranteed a refund if the project failed to deliver. It’s difficult to image either Kickstarter or Indiegogo offering this service themselves, so this insurance would have to be offered from an outside party. Like a good crowdfunder, State Farm is there.
These predictions aren’t ordinary, timid, or tame. They’re BOLD. Which, said another way, means they could be entirely wrong. Only time will tell. But one thing is certain, crowdfunding has evolved in ways that no one saw coming ten years ago.
And as we sit here shaking our Magic 8-Ball, asking, “Does the future of crowdfunding look bright?”
We keep getting the same response.
“All signs point to yes.”