Crowdfunding: Out of Control or Just Getting Started?
By now, if you visit social media sites, I’m sure you have heard of “Crowdfunding”. It isn’t a new concept, and in fact, it has been around for some time now. According to our friends over at Wikipedia (hey guys!), Crowdfunding derives from Crowdsourcing and was first utilized way back in 2006 by a guy trying to fund his own video blog. Crowdfunding is basically a person or a company attempting to raise money from multiple people over the internet for a service, project, cause, investment, new company, etc.
Everyone seems to be doing it, and for almost everything. Nonprofits are using it to raise money for their causes such as funding a school year for kids or helping supply water to the far reaches of Nicaragua. Individuals are using it for funding those things that they are passionate about, such as helping a loved one through cancer treatments or helping someone pay for a trip to see their ill grandmother. Heck, even commercial businesses have begun using it to launch new products to consumers (congrats Ryan), test markets before deployment, or finance a start-up company.
So, it’s a good thing, right? Well… yeah, of course it is.
Sure, you can make a case that says a guy wanting to learn how to make potato salad should probably just spend the $10 it takes to try it out instead of crowdfunding it, but then you wouldn’t have that awesomeness that is the internet happen and instead of $10, you help Zach Danger Brown raise $50,000 to make potato salad. I mean, how awesome is that? He just wanted to raise some cash to try making something and mainly meant it as a joke. One media outlet covered it, then it caught fire on Facebook, and BAM! $50,000 and now he has to figure out how to feed everyone a bite of it.
So what could possible go wrong with this incredible way for a community to support others? Well, crowdfunding sites such as Kickstarter, Indiegogo, Crowdfunder, RocketHub, and others all have their own terms and conditions. Most of everyone that gets involved in doing crowdfunding or helping to source the projects are pretty honest as well, but it should be noted that these sites are very clear that they do NOT guarantee that a creator’s project will get completed or that you will ever see anything from it. When it comes to sites like this, where you expect a product or service in return for helping the cause, that might be an issue.
For sites like GoFundMe or YouCaring, it’s all about donating and crowdfunding something that actually has no return, well… except that warm fuzzy feeling you get from helping out someone in need. To be honest, I tend to browse these types of sites when I’m looking to donate money to a cause. You can easily get drawn in to the hundreds of thousands of stories from all over the USA of people struggling, stretching, and just surviving that can use your $5 donation. And really, THAT is the greatest thing about crowdsourcing. It doesn’t take a lot to make a difference in helping someone else.
So what’s next for crowdfunding? Well, over the past several months, more and more equity companies are popping up, and now even money lending is involved like those backing SoMoLend, a site that lets you borrow money from friends and family, and pay them back with interest.
Basically, this crowdfunding thing has been around for nearly 8 years and it is only getting stronger. Heck, I might just have to start a campaign to fund my new line of “hummingbird cologne”. It’s basically just sugar water, but heck, you don’t need to know that, all you need to know is to fund me.
Let me know what you think. Leave me a comment below.
P.S. – Why are there so many wallets on Kickstarter?