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Crowdfunding: $1.5 billion in 2011. $3 billion in 2012?!

Stashed in: @fredwilson, Awesome, Crowdfunding, Consequences

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Crowdfunding is a big trend that is just getting started:

This is the future, as more interesting projects and organizations fund themselves this way.

Why lose money in the stock market when I can use it to make interesting things happen instead? I'd much rather invest in interesting people now, than big corporations for a shot at a future return.

There are almost 500 crowd funding platforms now.

Many of them are equity based:

"Equity-based platforms grew at 114 percent CAGR, with the largest growth primarily taking place in Europe. Perhaps unsurprisingly, the equity-based category also raised the largest sums per campaign, as over 80 percent raised over $25K+."


The more I think about this, the bigger a deal it seems to me.

It really creates more opportunities of entrepreneurs, and that is very exciting.

Crowdfunding has consequences for venture capital, according to Fred Wilson:

In the past five years, the amount of angel investment has grown fivefold and more international funding is also entering the startup sector, particularly from Russia and the Middle East, Wilson said. The growth of crowdfunding (made possible by the recently-passed JOBS Act) will further flood the startup market with new capital. If every American family gave just one percent of their investable assets to crowdfunding, he said, $300 billion – or ten times the current amount invested in the sector – would come barreling into venture capital. (That seems to be a pretty big assumption but, regardless, the point is well taken: crowdfunding stands to dump a huge amount of new money into startups.)

“This is, I think bad news for the venture capital industry, but terrific news for the entrepreneurs,” Fred Wilson said, adding that over the past two decades, “it’s been an inexorable march from an industry that was very much skewed towards institutional VCs to an industry very much in favor of the entrepreneurs and it’s just going to get more and more and more that way.”


I wish everyone who wanted to buy a lottery ticket or gamble in Vegas would choose crowd funding instead. You want high risk action? Here you go, and it can help launch a great company, provide a needed service and make a dream come true.

I wonder if we could build a crowdfunding site that looks like a lottery or a Vegas game.

It would be called... Silicon Valley.

Crowdfunding will be enormous. Kickstarter is just the tip of the iceberg. We've seen retail investors pile into asset classes before--just think of how the mutual fund industry has grown in the past few decades.

To succeed, VCs will need to unbundle their services from their money; there will be times when they provide services, and times when they provide services and money. But I doubt simply providing money will work anymore.

Chris, I agree, and there are still many details to figure out.

Once Goldman Sachs and Morgan Stanley start creating investment vehicles around this, I will know to get nervous...

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