As marketers continuously attempt to dive into the minds of Millennials, they may want to give notice to a new way of investing that has caught fire: crowdfunding. Whether it is for disaster relief, artist support, or startup company investing, crowdfunding has proven to be a valuable tactic to raise money through a collective effort of individuals pooling money to fund efforts initiated by other people or organizations. At a time when more aspiring entrepreneurs are trying to break through the crowd and launch their innovative ideas, crowdfunding offers the opportunity to gather investments to bring their ideas to life. When considering the empowerment it has offered Millennials to develop projects they believe in at little to no cost coupled with their willingness to share and attachment to the digital space, crowdfunding has become a very unique and exciting movement that has already resulted in some amazing new products.
How Does It Work and What Exists Today
Crowdfunding is a revolutionary way for entrepreneurs to seek investments that circumvents the need to seek out traditional venture capital. The entrepreneur posts their idea pitch on their own unique page and gives the general public an opportunity to invest, whether the amount is a couple of dollars or thousands. There are certain pledge benchmarks that provide a value-add to the investor. For example, if a backer pledges $10,000 or more on a movie production campaign whose goal is $75,000, they would get VIP treatment at the premiere, their name in the credits, the first copies of the film, etc.
Social Media as the Primary Catalyst
With the incredible adoption of social media within the Millennial demographic, motivated individuals can share their ideas and vision/cause in hopes of fulfilling a monetary goal. When an entrepreneur launches a crowdfunding campaign, a key component of reaching a funded campaign is by sharing it amongst various social networks to their friends, family, and professional network. Just yesterday, I had a message in my Alma Mater’s Greater NYC Alumni Chapter Facebook group that was asking for backers and supporters for a startup documentary series on Kickstarter. The poster preached entrepreneurship and requested that backers share on their respective social networks to help spread the awareness of this project. This is just one of the many examples of how social media and its viral ability make it one of the most coveted and effective channels for building crowdfunding awareness.
Opportunities for Marketers
With the popularity of crowdfunding booming, marketers must begin to identify potential opportunities to reach the millennial entrepreneurs. It will be interesting to see how big the movement and how successful these websites will become, with the hope of getting purchased or acquired by companies. A potential groundbreaking opportunity for the social platform giants (Facebook, LinkedIn, etc.) is to offer their own crowdfunding platform on their websites.
Consider how easy it would be for entrepreneurs who already have hundreds of connections on these sites to share their idea and raise awareness without their network having to click to other sites to invest. It would be a win-win for the social media sites as they can collect a percentage of the money raised. In the future, watch for brands and marketers to partner with successful campaigns to create holistic and effective cross-branding campaigns.
Crowdfunding is the progressive way for Millennial entrepreneurs to garner investments, share their ideas, and bring them to reality. Anybody with initiative who sees a problem yet to be fulfilled in society can now produce a solution. It’s an evolution of the traditional investment, and Millennials are taking advantage of it. As a result, very innovative products are becoming available to the consumer market, challenging marketers to stay ahead of the crowdfunding game to engage these entrepreneurs.