Why should big companies turn to crowdfunding?

There was this stereotype that crowdfunding has always been a source of finance for startups or new businesses. But during the last few year crowdfunding has changes a lot, evolving from a source of finance to a multi functional tool for established businesses also.

Big companies like Sony, Coca-Cola, Gillette, Segway, HoneyWell, General Electric, Hasbro, P&G, Bose, Whirlpool, Motorola, and many more have turned to crowdfunding as a tool for market research, validation, feedback etc.

What’s the value of crowdfunding for big companies? The companies listed above don’t seem to lack finance for starting new projects. The answer is simple: research.

Companies like the ones listed above can afford to spend millions on new product research, development, marketing, launch them fail and restart.

But crowdfunding saves them those millions, companies can launch a crowdfunding campaign having only a few prototypes. After and during the campaign they will receive:

  1. Market response to their new products.
  2. Validation of market research.
  3. Feedback from an engaging community (backers are very active as they feel they are a part of the projects success, plus they put their money where their mouth is).
  4. Pre orders, which will help in planning production.
  5. PR — Medias love to cover interesting crowdfunding campaigns

So with crowdfunding companies can achieve results in 2–3 months instead of 1–2 years.

I’m sure that in the near future we will see more and more big brands entering the crowdfunding sphere and competing with startups. Increased competition will increase the quality of projects.

Crowdfunding is evolving.