For many people, 2008 was a very difficult year. Lending was greatly restricted, incomes became stagnant, and companies decided to go lean and mean. Although that was tough, the outcome of this difficult year was an emphasis toward crowdfunding. In the new landscape following the Great Recession, raising capital needed to take a new form. With more than 450 crowdfunding websites around the world today, it has certainly achieved more growth than even the experts would have predicted.
There are 6 things to watch for when considering the future of crowdfunding. Here is what you’ll want to look at if you’re thinking about getting involved.
1. Growth of Crowdfunding Isn’t Slowing Down
In 2012, it was expected that about $2.5 billion would eventually be raised in total capital. In 2013, that amount more than doubled. In 2014, it is expected that the capital fundraising efforts will double once again. These figures are only going to keep rising as Title III of the JOBS Act finally gets passed and non-accredited backers can get involved in the US.
2. Industries Will Cut Out The Middle Man
It is estimated that the crowdfunding industry is worth more than $100 billion today. Because crowdfunding allows a company to go directly to a backer, expect many industries to start cutting out the middle man in order to save even more money. This is especially true with real estate fundraising, where the trend is already starting to take hold. Instead of broker or agent fees, real estate development companies are turning to crowdfunding and have millions of dollars in success to show for it.
3. Social Networking Will Drive The Future of Crowdfunding
Because people today engage more often on social networks than anywhere else, crowdfunding will become as much a social phenomenon as it is an investing phenomenon. Projects will go viral on websites like Facebook and cause entire groups of friends to want to contribute. People will feel like they have an edge over other backers and for most companies, the engagement with each backer is nearly free.
4. More Money Is Coming
As soon as the investment market opens up, more money is going to come flooding into the crowdfunding arena. Even at $10 billion in 2014, if the figures hold, that’s just an estimated 10% of total market.
5. Crowdfunding Will Become a Niche Paradise
There will always be major crowdfunding platforms that attract backers, but the niche movement is going to take off like never before. People will be able to invest into industries or fields that they care about and they’ll be able to establish relationships with the projects. This will lead to loyalty and that loyalty will lead to even more cash.
6. Watch Out For Regulation A
Regulation A is what allows a small venture, under $5 million, to avoid some of the tedious reporting of the finances that companies are required to perform. With Fundrise approaching backers for as little as $100, that’s good news because there could be thousands of backers in a project and that’s a lot of paperwork.
Strong proponent of individual liberty and free speech. My goal is to present information that expands our awareness of crucial issues and exposes the manufactured illusion of freedom that we are sold in America. Question everything because nothing is what it seems.