The boom of crow-funding

For those who are not familiar with crow-funding, Wikipedia defines it as “the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the internet, to support efforts initiated by other people or organizations. Crowd funding occurs for any variety of purposes, from disaster relief to citizen journalism to artists seeking support from fans, to political campaigns, to funding a startup company, movie or small business or creating free software.”

Crow-funding is factually speaking a booming development, visible in the by Massolution (www.massolution.com) posted research results on the money raised through crow-funding platforms (see the chart below). $0.5B has been raised in 2009, $0.9B in 2010, $1.5B in 2010, while the prediction for this year is $2.8B (+87% vs 2011).

The impact of crow-funding has been particularly important for creative arts. Yancey Strickler, one of the founders of Kickstarter, recently stated that around 10% of the films shown at the Sundance and Cannes festivals this year were crowd-funded.

The next step for crowd-funding could be the financing of companies’ projects. According to the Economist, Google has recently crow-funded the development of new fonts for websites, at around $3,000 a time. This could be a good way to test consumer demand, or to co-create products with customers. Furthermore, official sources from GM, say that the company might crowd-fund different tweaks to its vehicles, to see which ones customers want. Firms could even start to let employees seek crow-funding for their ideas and offer performance-rewards if they hit specific targets.