In my latest blogpost the term Equity Based Crowdfunding was introduced and despite the promise to blog about investment criteria for Crowdfunders (e.g. believers) I’ve decided to blog about the vastness of this potential group of investors, just a heads up the results are astonishing!
First a small recap, I’m still convinced of the fact that a radical innovation has to take place in the way we practice entrepreneurship and the way we finance entrepreneurship. We live in a world that is becoming extremely flat (global village), all due to the fast dispersion of the internet. Many traditional value chains migrate to the internet, and this migration withholds a great entrepreneurial opportunity to upset the traditional picking order, the success of www.amazon.com is an example of an excellent executed plan based upon exploiting such an opportunity.
As many traditional value chains can be replaced by digital ones, question remains why the value chain for investments hasn’t been migrated to the internet yet? In previous posts it became amply clear that regulating forces are at work here, these forces prevent an equity based method for fundraising over the internet, simply because this legislation is outdated and dates back to the days we didn’t had access to the internet.
Imagine you could invest a minimum amount directly in start-ups? You go to a website, you select an attractive business plan that suits your expertise or a proposition you truly believe in and you activate your network by letting them know you juts invested in a start-up. According to the “six degrees of separation” theory, it should be possible to connect with anybody on this planet within 6 steps, what about organic marketing?
This means that if you, as an investor, are able to plug your investment in your network you should have a theoretical reach of 1,802,330,457 potential investors (based upon the average number of persons worldwide with a tendancy to invest, source: GEM). This number clearly shows the vastness of this group, could very well mean a full alternative for the ways entrepreneurs obtain start-up capital nowadays.
And the best part is yet to come, these potential investors don’t behave as banks, they are people who have a interest in the success of the venture that goes beyond a simple Return on Investment. This implies that they will do almost anything to help you succeed as an entrepreneur (e.g. Crowdsourcing).
Combining Crowdfunding and Crowdsourcing are not only ways to obtain information, aid and finance but used together they become a whole new breed of organization. These organization are operating in closer proximity to their customers and suppliers and by using the newest technologies become more agile than their peers to co-opt with the ever changing business environment. Who is in?