Crowdfunding: Four Changes in the Next Generation

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CrowdfundingCrowdfunding began as a social experiment and has been validated by thousands of consumers in a short period of time. New data suggests that this type of funding has facilitated more than $1.5 billion in global business transactions. Crowdfunding is known as an individual contribution for non-monetary benefits.

In spite of the recent success of websites like KickStarter, most Internet platforms were designed as places to discover odd products. Now, they are seen as capital formation entities that help entrepreneurs bring new products to the market.

Here are four ways that the funding will continue to change:

1. Vertical platforms are slowly emerging and will start to focus on select segments. This phenomenon has already been seen in the boutique stores that cater to mobile apps, gaming, film, science and photojournalists. Specialized platforms are most likely to thrive in the fertile conditions that have an obvious funding gap. Some sites are even devoted to aiding small towns in the disaster recovery process.

2. The platforms will evolve into full-service sites. Engaging individual users on a personal basis will continue to foster the development of sites and encourage expansion. This effort is already in place on sites like KickStarter and IndieGogo. Both sites focus on the user experience and offer a variety of resources that enable a continuous feedback loop.

3. Creativity and inspiration will be supported by organizations and individuals. Community support will continue to pour into crowdfunding and will compete with individual contributions. Donors.org highlights this trend. The site has recently shifted its focus from individual to corporate clientele.

4. Benefits-based funding will enhance equity-based approaches. Both platforms address distinct areas, and they can mutually coexist. The community-based platforms will ultimately serve as a vessel for investors and entrepreneurs.

It does not matter if you are a consumer or supplier, crowdfunding is sure to be influential in the future.

Read more at The Washington Post.