Crowd-funding: we really are all in this together

A couple of weeks ago, Google made headlines with the $1bn (£662m) acquisition of Waze, a crowd-sourced traffic app which uses data from its users to transmit real-time information about roads and traffic.
Waze has around 15m users who contribute information via the app, which then provides instant data. The business is “pre-revenue”, but is in the early stages of linking its mapping to advertisers to create a fully interactive service. Google reportedly beat off competition from both Apple and Facebook to acquire the Israeli start-up.
What struck me about this deal was that Google has spent billions of dollars on its Street View mapping programme. Yet it still saw significant incremental benefit from the type of data that Waze’s users are generating.
A major failing of Apple Maps was that it didn’t have the critical mass of user data to provide accurate and detailed information. Waze’s crowd-sourced solution seems to represent a threshold moment in our development of collaborative consumption.
The potential power of collaboration through technology has long been talked about as something that can fundamentally alter long-held norms within developed economies.
Now some of the signs from successful players harnessing the benefits of crowd-sourcing and collaboration are really altering how we behave, interact and perceive things.

The success of emerging marketplaces such as Airbnb has demonstrated new attitudes to property and ownership that would undoubtedly not have surfaced without the internet.
Airbnb essentially solves a latent inefficiency in the property market of basic “haves” and “wants”, which, through technology, has successfully enabled sufficient trust to build a viable market.
The growth of Zipcar represents a similar psychological shift. Ten years ago, hiring a car for day-to-day use rather than owning one would have seemed fairly strange. But now Zipcar has become something that people see as a convenient way to satisfy their travel requirements, albeit only in conurbations.
People are beginning to view the necessity of ownership completely differently: why buy a physical CD when you can get all the music you want merely by streaming it?
Rachel Botsman, co-author of What’s Mine is Yours: the rise of collaborative consumption, has called these behavioural shifts the beginnings of an economic revolution.
Mass collaboration via the internet is a powerful force for effecting important social initiatives, too. Samasource has developed micro-work, outsourcing small digital tasks to the developing world, creating a living wage for people who would normally have no access to such work.
The workers are relatively unskilled but Samasource breaks down the projects into manageable portions, creating work at one end of the scale and saving time and costs at the other. Their clients include Google, Samsung and Intel, and the company aims to have involved 120,000 people all over the world by 2016.
Another huge behavioural shift that has rapidly emerged in the past two years is using the power of the crowd for financing. Before the financial crisis, financial innovation through technology probably didn’t move as fast as it could on account of the ready and cheap availability of credit.
When that credit dried up after 2008, the internet created new solutions, as it has done in so many sectors. Many businesses and commentators have struggled with what exactly to do with the ubiquity of the web and its ability to throw off so much data – crowd-funding has turned those questions into definitive platform strengths and now we are seeing quite amazing developments.
Some recent research has shown that in 2012 crowd-funding sites raised a total of $2.7bn worldwide, an increase of 81pc on 2011. Kickstarter led the way in 2009 and to date has had 4.4m individual contributors, financed 44,000 creative projects and raised $692m of capital. Many of the sorts of projects Kickstarter showcases would probably have fallen flat if traditional fund-raising routes had been taken.
The UK has seen some of the most exciting crowd-funding developments. The internet’s enabling power and use of data have been brilliantly harnessed by Zopa, for example, one of the first businesses to create a peer-to-peer lending service.
More than £90m was lent last year to individuals by individuals, with lenders having the ability to choose what level of risk they want and then bidding for what they deem to be an appropriate interest rate.
Each loan is packaged so that a lender’s exposure is limited to £10 for each borrower and default rates are incredibly low, at only 0.5pc on an annualised basis.
The service gives borrowers access to capital that in today’s environment they wouldn’t be able to get from a bank – or would simply be made unaffordable – while lenders can place their cash in an instrument with a far higher yield than in a bank.
Despite crowd-funding really taking off in the US, regulators have been very slow to approve any structure that permits the distribution of equity rather than rewards.
The UK, on the other hand, has actively encouraged this and companies such as Crowdcube and Seedrs have found a formula that protects unsophisticated investors while still maintaining the breadth of access that underpins the collaborative concept.
Seedrs has so far raised £1.3m for start-ups across 25 deals and has a long-term goal to raise £100m a year. No such concept yet exists in the US and it is still a nascent concept in Europe, making the UK the genuine frontrunner.
The Government has helped, too, with regulation provided by the Financial Conduct Authority and the Seed Enterprise Investment Scheme offering large tax reliefs to further encourage investment. If early predictions that more than £15bn of financing could be sourced in the next few years, these will prove to be worthy efforts.
Across a range of industries the power of the crowd, enabled through the internet, is beginning to cause marked shifts in people’s attitudes and behaviour.
It’s encouraging that in the UK we are alive to these changes and are providing favourable structures and frameworks to allow them to thrive.
If the 20th century was about hyper-consumption, there are signs that the 21st century is moving towards a period of collaborative consumption that fundamentally changes how we think about our economy.
Jonnie Goodwin is founding partner of Lepe Partners

Source: Telegraph UK – By Jonnie Goodwin 13 Jul 2013
Link: http://www.telegraph.co.uk/finance/comment/10178102/Crowd-funding-we-really-are-all-in-this-together.html

HEADLINE NEWS

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news [...]

NPRAfter Outcry, Crowdfunding Site Patreon Backs Off Plan To Raise ...NPRThe popular crowdfunding service Patreon has backed off plans to change its payment structure, after widespread, vocal and passionate opposition from creators and their fans. Last week, the site announced it woul [...]

TechCrunchHow hate speech crowdfunding outfit Hatreon crept back online ...TechCrunchIf you want to make a living creating white supremacist content, you're probably not going to do it via sites like Kickstarter and Patreon, which prohibit hate speech. Fortunately there's Ha [...]

EntrepreneurWhy Some Small Business Owners Are Turning to Crowdfunding to Save Their CompanyEntrepreneurMany owners of beloved local businesses, especially in pricier cities, have been forced to swallow their pride and appeal to their customers in times of crisis -- a process streamli [...]

CoinDeskKickstarter ICO? Don't Count On It Says Crowdfunding Leader ...CoinDeskThe company most widely associated with crowdfunding, Brooklyn-based Kickstarter, has no plans to get into the initial coin offering (ICO) business. Coming in response to the news yesterday that compet [...]

ForbesCrowdfunding Do's And Dont's From iFundWomen's Karen CahnForbesDuring our conversation, she was transparent in sharing that her first software company, VProud, failed because she “did everything backwards” and spent too much time trying to perfect the product. “Pe [...]

CryptoCoinsNewsCrowdfunding Giant Indiegogo Looks to Make ICOs MainstreamCryptoCoinsNewsCrowdfunding platform Indiegogo has a plan to help initial coin offerings (ICOs) break into the mainstream, even as the U.S. Securities and Exchange Commission (SEC) is ramping up its oversight of [...]

WRAL Tech WireBack story: How, why investor Mark Easley brought crowdfunding platform Localstake to NCWRAL Tech WireRESEARCH TRIANGLE PARK – Earlier this week, WRAL TechWire broke the news that Triangle investor and crowdfunding advocate Mark Easley was bringing Localstake, a crowdfun [...]

Crowdfunding via Customers: Is This The New Startup Capital?Customer ThinkWith more and more companies in a variety of sectors developing new crowdfunding campaigns, it makes sense to ask whether crowdfunding is likely to replace startup capital in the near future. Crowdfunding is qui [...]

TechCrunchFormer Gawker employees are crowdfunding an effort to buy Gawker.comTechCrunchWhile Univision acquired most of Gawker Media's sites last year (and renamed them as the Gizmodo Media Group), the deal didn't include Gawker itself. In fact, BuzzFeed reported last month [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |