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Blog

Vital Crowdfunding Trends in 2017

JL Law

From a small personal fundraising platform in 1997, crowdfunding has evolved into a comprehensive validation tool for startups, nonprofit organizations, and corporations. And, it will continue to transform in years to come. In fact, The World Bank reported that the crowdfunding investment market is projected to hit $93 billion by 2025, wherein “the potential size of developing world crowdfunding would represent 1.8 times global venture capital investments.” Therefore, it shouldn’t come as a shock that business owners and fledging entrepreneurs are keen to secure a slice of this booming industry.

Now, there are particular trends that are expected to shape the crowdfunding industry this year. Read on below to find out the most important crowdfunding trends in 2017.

Crowdfunding for justice

Crowdfunding is starting to influence other markets, from real estate, medical, and now, even the justice system. A crowdsourcing platform that focused on increasing public awareness for legal cases became popular recently in the United Kingdom, as various individuals rallied for Brexit and defended the Article 50 submission. Last year, the Business Insider UK reported that people have already gathered more than £75,000 ($93,524) to pay for the legal defense that Parliament must vote on before triggering Article 50 or the motion for Britain to leave the European Union officially. FXCM explained that once this is triggered it “cannot be withdrawn” and the process of leaving the 28-nation consortium is “not irrevocable”. Although Britain’s Prime Minister submitted Article 50 on March 30, regardless of the petition, the trend in 'crowdjustice' continues to grow. In fact, the platform was launched in January in the United States. It was recently used by the people of the United States to help raise funds to file a lawsuit against the Trump administration.

Rise in smart investors

With fears of market uncertainty and possible recessions, sponsors have now become smarter in terms of investing and will take necessary steps to insure their investments will be fruitful. As crowdfunding offers just about anyone the chance to invest (and is no longer restricted to Venture Capitals), entrepreneurs should prepare themselves to spend time educating the new breed of investors regarding the advantages of pledging equity to their projects.

For some, maximizing services that can manage and market their campaigns might be worthwhile. There are also ways to direct backers to certain websites where they get to learn more about the campaign while instilling confidence in first-time investors. But, the most effective way in capturing an audience’s attention is by ensuring a proactive approach to a project, reinforcing the reciprocal relationship of crowdfunding, and ensuring that the product promised is delivering what is expected of it.

Corporate crowdfunding carries on

In its infancy, crowdsourcing allowed individuals or startups to raise money for personal projects or business ideas. But, recently, we saw a trend of large corporate companies maximizing the process as a research and validation method. Venturebeat reported last year that Indiegogo invited corporations to crowdfund with record-breaking campaigns transforming pre-orders into publicity and low-risk capital (‘Enterprise Crowdfunding’). 

“It is about understanding the market very quickly, which is a real benefit. It also brings a guarantee of a certain number of purchases and it generates loyalty,” explained Duncan McCann, researcher at the New Economics Foundation.

We expect to see a boom in crowdfunding this year as startups to large corporations maximize it in authenticating ideas, garnering support while determining demand with very little risk. However, there are investment restrictions that should be considered by investors (Title III). Consider reading our guide to Jobs Act Crowdfunding here.