The Sharing Economy is NOT Big. Part 6. Makerspaces & Crowdfunding

Tala
Tala
Oct 19, 2016 · 7 min read

Collaborative Creation: Maker Spaces.

Maker Spaces are networks of connected individuals and communities that take manufacturing away from centralized companies and into their workshops. Maker spaces are physical nodes where people gather to collaborate on engineering, computer science, and graphic design projects. They function as libraries where instead of borrowing books you can borrow tools and expertise.

Maker Spaces were inspired by the hacker movement and they’re famous for hardware projects. They have a lot in common with Coworking spaces in that both are the collaborative economy manifested in a physical space. Some parts of this economy have a strong relationship between bytes and atoms. This is especially true here. They democratize manufacturing and this is where they fit into the collaborative economy.

Tools for metalworking, woodworking, electronics, textiles, computers, 3D printers and laser cutting equipment can be found there. A lot of rapid prototyping in the 3D printer space.

The wave of major disruption that social media brought, was largely digital. Software taught us about iteration and collaboration. Now these lessons are being applied to hardware like never before. But these atoms are supported by bits that make the resources sharable. R&D is moving from the corporations and into these networks of makers and inventors powered by 3D printing and social networks.

Impact:

Now there’s a national week of making started by the White House. The democratization of invention is at a historical high, and the maker movement is part of this. Anything that leads to more invention is by definition extremely valuable.

Thingverse, the makerbot digitizer and, Square all came from maker shops.

Makerspaces reduce time to complete products because of the expertise that a maker can draw on to get questions answered.

Cities like Pittsburg and Chattanooga are enjoying growth that came from their investment in makerspaces and Makerfaire’s now draw hundreds of thousands of people.

Future:

I’m hoping to see more libraries expand into fully blown makerspaces. This way the information to create and the means to do so are in one place. A recent survey of 143 librarians noted that 41% of respondents (from 30 US states and 7 countries) currently provide makerspaces in the library .

Despite makerspaces having been around for a long time there have been very few breakout successes stories. This is probably due to the fact that makers are creating amazing products that no one wants. The link between these spaces and startups, will have to get stronger so that we can see more cases like Square.

Given, the purpose of makerspaces are not to spin out commercially succesful products. But this space holds another kind of value. Communities like this are a special node in the tech ecosystem. The educational uses of these spaces alone makes them worth keeping and supporting. I’d like to see more money go here. I’m just not sure where it’s going to come from.

The impact the maker movement will have on education could be huge. Learning by doing will take over learning by theory. Savvy educational institutions will provide the learning tools that makers are looking for.

The price of 3D printers is going to keep dropping so they will proliferate. With more people creating on these platforms we will see an explosion of physical products and product types. Already the number of uses are growing. Medicine, housing, manufacturing, prosthetics. The amounts of materials that can be used in 3D printers is increasing also.

More uses will be found for it, and eventually, it will be the core technology for enterprise-scale businesses.

The reason why this space is more important than it looks is because it encourages one of the epic archetype founder stories. The tinkerers who figured them out themselves in a garage. The hobbyists that came together to build computers. We need as many more Homebrew Computing clubs as we can have. Makerspaces are a great way to do this.

Collaborative Financing: Crowdfunding.

So far Kickstarter alone has raised over $2.5 Billion dollars that’s gone to 109,330 projects. That’s a lot of small businesses, artists, startups, and individuals that have found funding on Kickstarter alone. No other funding options available give the project owner more control over their finances because it’s not a loan and you don’t have to give up any equity.

Now it’s also a platform for traditional financiers to find new ideas. Successful crowdfunding campaigns prove that markets exist for many more products than we would have imagined.

You can get funding from any country that has a crowdfunding website. Compare that to a bank where available services drop significantly as soon as you cross a national border. Crowdfunding is just one type of collaborative financing. There are all types of marketplaces that do things like peer to peer loans, peer to peer currency exchanges and microfinancing, but these are outside what is discussed here.

In 2009 Equity Crowdfunding was introduced, and it allowed high net worth individuals to invest in non-listed businesses and startups for equity, debt, or profit sharing. In 2016 when the JOBS Act passed, startups could raise up to a million dollars from accredited and retail investors, also in exchange for equity securities. This is another way in which venture capital is being disintermediated by crowdfunding.

Video games like Star Citizen and the smartwatch company Pebble Time were also born on crowdfunding platforms.

Impact:

Before crowdfunding, most of these projects would have found it impossible to exist. Prior to crowdfunding and besides family and friends, the only way to fund a project would be a loan from a financial institution. This required would require collateral and a sufficient credit score as the means for deciding who to give a loan to. This model has under-capitalized projects that could be viable, as crowdfunding has proven.

Crowdfunding & ICO’s, are disintermediating the capital market. It’s a new way to fund hardware and software. You can call it collaborative capital because you have somewhat leaderless crowds , partially organized on forums and Telegram, and Reddit, Discord, Twitter and Kickstarter. They are somewhat self-organizing. And this method wihout a centralized authority making decisions is one of the fastest growing sectors of software ever. It’s also open-source.

The democratization of finance has lowered the barrier of entry for many people. Deepening the pool of entrepreneurial talent.

Crowdfunding has surpassed the National Endowment for the arts as a source of funding for artistic projects.

According to Investopedia “In fact, equity crowdfunding is projected to surpass venture capital as the leading source of start-up funding reaching a projected $36 billion by 2020 versus venture capital funding and angel investor funding at around $30 billion and $20 billion per year, respectively.”

Future:

http://crowdexpert.com/crowdfunding-industry-statistics/

More specialty platforms, like crowdfunding for very specific causes, will emerge. Like Crowd Supply.

In 2014 the Mayday PAC raised $11 million, the first crowdfunded PAC in history. A PAC is a political committee made to raise funds and spend them to get candidates elected.

Political crowdfunding is going to grow and governments may join the fray and use crowds to vote on different approaches to particular problems.

Existing social platforms like Reddit, have started running crowdfunding campaigns of their own, and this trend is going to continue.

We can also expect more corporations getting into the mix to test their products on crowdfunding campaigns like KIA and Sony already have. Crowdfunding can give you a lot of information before a product launch. Some of this information comes from interactions on social networks. Making this form of commerce much more “social”.

Real estate crowdfunding is taking off. And AIG launched an insurance product specifically to protect equity crowdfunding investors. So an industry that supports crowdfunding is going to grow beyond outsourced manufacturing and marketing to include financial services products.

The market for loan type of crowdfunding projects is by far the largest of all other types of funding models. This is relatively new. Not so long ago donations and rewards were the only ways to crowdfund. Peer to Peer lending is growing fast. This is in direct competition with one of the main forms of revenue for banks. Interest from loans. It shows how much traditional forms of capitalizing businesses are competing with crowdfunding.

How long will this technology live? It’s a cornerstone of the new economy. More funding types are being invented. This market is bigger than it seems.

The total market cap of Crowdfunding was estimated to be $34 billion in 2014. The Crypto market has a strong connection to crowdfunding. As of May 25th 2019, the total Cryptocurrency Market Cap is $251,575,129,776 according to https://coinmarketcap.com/.

I haven’t calculated exactly what percentage of cryptocurrencies were not started through crowdsales. However, it’s fair to say a majority of the market was. This list includes Mastercoin, Etherum, NXT, iota, NEO, Spectercoin and EOS. This is by far the most interesting iteration of crowdfunding. A coin sale is a crowdfunding campaign. So the larger figure is much closer to the true size of the market.

Now cryptocurrencies have a life of their own. Some of the biggest crowdfunding campaigns of all time were for cryptocurrencies. The speed at which both of these markets have grown is a true indicator of how explosive growth has been in this sector.

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