By Hector Botero (President & CEO at iCrowdNewswire, LLC)
According to some in the know corporate communications, investor and public relations, digital marketing and advertising, are on the verge of an explosion and the winners stand to be those that need it most: sole practitioners, small and medium firms. Don’t get me wrong, everyone in the industry will win but due to the very nature of where crowdfunding comes from, the JOBS Act which is designed to create jobs by empowering SMEs, means that opportunities on the smaller side of engagements and contracts will grow fastest. And the explosive growth in jobs, engagements, assignments and new business has arrived, it is here today. “We are ecstatic that our data continues to show that capital is flowing to small businesses and entrepreneurs through securities-based crowdfunding,” says Luan Cox, CEO and Co-Founder of Crowdnetic. “The first quarter of 2015 is off to a great start for the industry, and we hope to see this momentum continue as more investors learn about crowdfunding as another method to build and diversify their portfolios.”
I talk with professionals in the industry daily and more often I am finding those focusing on the market of the crowdfunding campaigns that need help. As they see it its rather simple: first, 60 percent of all crowdfunding campaigns launched today fail to meet their crowdgoal (SM) and the biggest reason is poor planning, no follow through and no professional guidance. Second major reason the opportunity for smaller firms exists is the size of the campaigns: most of them are too small to afford a big time consultancy. This will change and change fast, but the opportunity for the SME communications specialists will remain.
Estimates from The World Bank project that crowdfunding worldwide will reach $300 billion by 2025 and some estimates are much higher. The overall economic impact of a market this size in is the Trillions and considering that the one trading value of the New York Stock Exchange is approximately $44 billion – then what we really have is a market that is less than 10 years old with a respectful trading volume and a very high rate of growth.
But back to my opening point, this will require an army of organizers, professionals that understand communications, investor relations, proper planning and marketing. And therein lies the opportunity.
But as with anything else there are pitfalls to be aware of and caveat emptor has never been more appropriate. No one can really promise you millions for the next bathtub rubber ducky and deliver – it just is not so. The basics of successful crowdfunding were written years ago by the practices of today’s financial markets. Be realistic, do research, plan and get professional advice. Successful raises have lawyers, bankers, financial advisors – they do road shows and present their projects. They presell their offerings and hit the ground running with backers in place. They have plans that make sense. Do you need all of this for a successful crowdfunding campaign, no. The very reason for lowering the bar and allowing general solicitation, general advertising, non-accredited investor contributions and simplified registrations is precisely to expedite the process. The key word being expedite which does not mean throw everything that makes sense, provides credibility and we know works out the window.