It has not taken long for the crowdfunding industry to make a dramatic impact on the entrepreneurial world. Crowdfunding has allowed new ideas to take off, businesses to raise capital, and the average person to get some skin in the investment process. It isn’t a perfect industry, but there are changes coming which will help to make crowdfunding even better than it is right now. Here is a look at 5 specific changes to expect.
1. Equity Crowdfunding Will Go National
The JOBS Act might have been passed in 2012, but the third phase of it, equity crowdfunding, still doesn’t have rules in place. Those regulations are going to get settled in the days to come, but it will likely be 2016 before there are national rules in place. In the meantime, several states in the US have already adopted equity crowdfunding rules so that people and businesses can work together more efficiently.
2. Interest Rates Are Going to Begin Recovering
The Federal Funds Rate has been historically low for quite some time. This initial “base” interest rate is expected to rise in 2015 as it works to resolve inflationary issues that are starting to be seen in the economy. This will help to fuel even more economic growth, but not without a possible soft recession or tighter access to credit as an outcome. That will make entrepreneurs turn to crowdfunding to have their needs met.
3. The Expansion of Crowdfunding is Going to Cease
There are hundreds of niche crowdfunding platforms that are operational right now. This is a good thing, but it has a finite level of saturation. Beginning in 2015, we are going to see the expansion of platforms begin to cease, which means there will likely be more crowdfunding platforms closing up shop than opening up in the days to come. Another issue to consider here is the implementation of enhanced disclosure regulations that will put fraud reduction and educational materials as points of emphasis.
4. It Will Become a Focus of the 2016 Election Cycle
People are passionate about crowdfunding and for a good reason. It is something that can help the average person be able to invest a little, yet still get a lot out of the experience – including potential profits. There has been very little movement in equity crowdfunding over the last 4 years. Other nations have taken the lead and this has left US backers scrambling. How the future entrepreneurial market develops will depend on the actions that are taken in 2016.
5. Watch Out for Andreessen Horowitz
With millions already invested into online platforms like Teespring and Crowdtilt, this Venture Capital firm has set its sights on making crowdfunding become the go-to method of getting the cash that is needed. They might even setup their own crowdfunding portal in 2015.
Crowdfunding may just become the most important tool for capital in the future. Almost all new jobs are created by small business owners and startups, not large businesses, which means the future of the economy depends on the success of these changes. Watch out for these trends and you’ll have an idea of what crowdfunding will be in 2015 and beyond.
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