For enterprises, crowdfunding is not about financing their own growth — so why should enterprises make use of the new way of raising capital?
According to Invested.In’s Alon Goren, there are four key benefits of enterprise crowdfunding: idea validation, innovation, corporate social responsibility, and marketing.
First, idea validation and innovation. Crowdfunding allows users to vote with their dollars. This sends very strong market signals to enterprises considering various options — like color and form factor — for their new products.
One of the Massolution NYC 2013 speakers, ABN AMRO’s Arthur Van De Graf, described an experience where his organization did just that.
The European bank created the platform Seeds in order to introduce a completely new offering to its clients. The platform enabled businesses to raise funds from their fans and potential customers. The campaigns, however, also acted as proof of concept, showing the bank which businesses appealed to the public and would be likely to succeed.
Next, corporate social responsibility (CSR). With crowdfunding, enterprises can run CSR projects that engage fans. To illustrate an effective way crowdfunding can bolster CSR efforts, Goren brought up the example of Ciel, a Mexican water brand owned by Coca-Cola. The brand set up a platform called Transformadora Ciel, which asked social entrepreneurs to pitch project ideas to place on the platform.
If a pitch passes the test, Ciel put the idea up to collect money on the Transformadora platform, automatically pledging 50 percent of the goal. In the first two months, the platform garnered 1,320 registered users, 450 pledges, 75 idea pitches, and raised 3.5 million pesos (roughly $275,000).
Finally, the marketing benefits. Staying with the same example, Ciel was not only able only raise thousands of dollars for good causes, but also had a very public forum to showcase all the examples. Goren called this a “new kind of marketing.”
“[Enterprises] need to figure out how to leverage this really amazing community revolution that’s going on right now, and use it to engage your community,” he summarized.
Source: Anton Root – crowdsourcing.org