Tim Aldiss writes for Shadow Foundr – don’t just follow the crowd, follow experienced investors
1. Investors are keen to diversify
The crowdfunding model opens up a new way for people to invest and enables them to move beyond more formalised and traditional ways of investing their money. In addition, crowd investment has encouraged individuals who would normally be put off from the idea of investing, to become some of the most important backers for causes and companies that are important to them.
2. Crowd investment is quite simply becoming more popular
Social media has been a driving factor here, though it is not the only factor at play in making crowdfunding an increasingly popular way to fund everything from startups to DVD and book releases. Moreover, this popularity seems to be increasing exponentially in a kind of snowball effect.
If we had to pick one word that is associated with crowd funding, it would most probably be ‘enthusiasm’.
3. A new emphasis on investor education
At the recent panel entitled The Future of Crowdfunding at the Los Angeles Crowd Invest Summit, one thing the experts gathered together agreed on, was that more education was needed to ensure that crowd investment was conducted in a responsible way in 2017.
This is because 2016 saw several incidents of investors plugging large amounts of money into projects that ultimately failed.
The enthusiasm so often associated with crowdfunding, mentioned above, is a significant cause of this. This enthusiasm has often prevented investors from thinking calmly and coolly about their investments. However, now that this issue has explicitly been noted by the experts, there will be a concerted drive towards educating investors about how to invest appropriately in crowd funded projects in the future.
4. The personalised feel
It is very common for investors on crowdfunding platforms to be rewarded with unique extras like personalised merchandise from bands or VIP tickets to company events. The way in which companies are increasingly capitalising on this, is one significant reason the future of crowdfunding looks like it is going to be very bright indeed in the coming year.
How popular is crowd investment likely to get?
At the aforementioned panel at the Crowd Invest summit, an intriguing issue was raised. This was the issue of whether the popularity of crowdfunding has the potential to disrupt the existing way of doing things in the financial markets.
The experts on the panel seemed inclined to say that there were limits to how popular crowd investment can become. However, given that not many people could have predicted the popularity of crowdfunding platforms when they first became an investment option, perhaps it would be more prudent to hedge our bets and wait to see what 2017 brings.