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The Future of the Crowdfunding Revolution
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editorial

The Future of the Crowdfunding Revolution

Editor's Note: The following is an excerpt from "The Crowdfunding Revolution: How to Raise Venture Capital Using Social Media" by Kevin Lawton and Dan Marom.

Also, see Kevin's latest editorial on community crowdfunding.

In the same way that social networking changed how we allocate time, crowdfunding will change how we allocate capital.

Never before has the human race truly integrated the collective wisdom of our now 7 billion people with mechanisms to allocate capital. Yet well over 2 billion people already use the Internet, and usage penetration is increasing rapidly. Until this moment in our history, capital allocation was largely the province of a relatively small and entrenched minority. Given the lack of available mechanisms to coordinate otherwise and the relatively slower rate of historical change, our systems necessarily coped.

But with the exponentially explosive growth of connectivity and complexity via our physical and social technologies, the classical human-to-human networks and centralized planning of capital allocation are folding and becoming increasingly dysfunctional. What are weaknesses of the old methods, especially the sheer scale and volume of information and ideas, are strengths of a new model of funding that has the potential to tap an almost unfathomable collective intelligence to process this collective complexity.

Therein lies the immense future of the crowdfunding revolution.

To the more recent generations, thoughts of days without social networking are only a subject of amusement and storytelling. In the same way, future generations will likely grow up with crowdfunding and wonder how venture financing functioned any other way.

So many socioeconomic changes that have already taken place were accompanied by fervent disbelief, often from the incumbents. There’s no reason to believe that crowdfunding will be any different. In fact, we’re seeing the beginning of that. But one has only to look around to see the major shifts enabled by modern technologies.  Book publishing, just to pick one, has been radically transformed by the ability to publish electronically. In fact, my coauthor Dan and I live some 7,500 miles (12,000 kilometers) apart, and we have never even physically met. That would have been nearly impossible not so long ago! More broadly, the entire media industry has undertaken systemic change, often begrudgingly integrating with the electronic age of social networking that we live in.

- More from Kevin is at trendcaller.com.

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