The Crowd Finance Revolution
The fastest growing sector of the world’s economy is ‘crowd-sourced’ money. At under $300bn, it is still less than 0.1% of the world’s wealth, though its potential impact in transforming the wealth and lifestyle of the masses and powering new innovation and jobs, is obvious. Like all technological revolutions, it is growing in strategic waves. We have already seen a pioneer wave that established the concept across the world, and now a simple innovation is about to unleash the full potential of this sector, producing massive new opportunities for all. Welcome to the new age of crowd finance.
The New World of Crowd-Sourced Money
Our new digital, connected world has empowered a new force in society called the crowd economy. Products, communities and companies are driven through collaborative peer-peer strategies. This has impacted every sector of society and delivered a host of superstar brands such as Wikipedia, Uber, Airbnb, Udacity and Bitcoin.
This infographic shows the global reach of the ‘crowd-sourced world’, with my specific interest being the world of crowd-sourced money. The graphic was created in 2015, so uses the old ‘crypto-currency’ term.
In this area, there are three parts:
Crowd-funding has two types — one is that of rewards/donations such as Kickstarter; and the other is assets such as equity or property crowd-funding. Projects succeed because a crowd can deliver as much as an institution. And the crowd loves new inspirational projects.
2. P2P Crowd-lending
Sometimes this is called debt crowd-funding. Individuals lend money to other people or companies collectively, because they earn a better interest rate than the bank (which isn’t hard!).
The crowd invests in the new class of digital assets (rather than other asset classes of equities, bonds, cash, property, communities]. The growth in number of assets, ease of investment and price has boosted this new space.
There is rapid growth in this sector, but most crowd-sourced money platforms have not tapped into the full potential of the power of the ‘crowd’. Given the wealth generating potential for the retail investor, there should be significantly greater growth, similar to that seen with Kickstarter and Indiegogo, who have attracted 100million people between them.
I believe the reason is simply that existing businesses do not provide the investor crowd with the infrastructure they need, to attract and empower them to invest in new financial opportunities.
And there’s the rub! This area is for new opportunities which retail investors have no confidence in. They need to look at investment in a totally different way from mature sectors like equities or property. They need a very different environment.
The only sector in the world that introduces the masses to new financial opportunities globally is the direct sales world. I know this because for decades I have been a leading strategic expert in this field and can tell you that the masses would never invest in any of the crowd-lending, equity crowd funding or nearly any of the digital asset exchange/platforms I have seen. It would scare them.
The natural evolution in this sector is to unleash the growth power of the crowd via a new crowd-centric ecosystem which delivers the environment the retail investor needs to have the confidence to get involved; that empowers and protects them in a way that works. I cannot emphasise how differently the masses respond to new financial opportunities versus sophisticated investors. Offer this crowd-centric ecosystem and there will be a flood of crowd investors.
The major development is that this one crowd can use one platform to invest in all of the opportunities that the crowd money world offers. Individuals could be offered investment in crowd-funding, lending through crowd-lending and investing in digital assets. It dramatically increases the financial potential of the platforms that tap into this.
Welcome to the New Age of Crowd Finance
Crowd finance will take what is already the fastest growing sector of the financial world and put it on steroids, in very much the same way Facebook did to the social media space and smartphones did to the internet. It took what already worked and delivered what was possible!
As John Updike once quoted ‘A revolution is just one crowd taking power from another.’