Crowdfunding is mostly discussed and presented as a finance source for SMEs, providing them capital in the form of pre-sales,equity or debt and potentially helping to bridge the finance gap at the early stage level. And this is actually its main role, which could have the greatest impact on our economies and therefore demands most of the attention from media and authorities. However there are also other functions of crowdfunding which can be useful and powerful especially under certain circumstances, for example crowdfunding as a way to test the market for a certain product or service or as a tool to encourage innovation.
The potential of crowdfunding as a market test for innovations has been also spotted by some leading tech companies. In particular, IBM was the first corporation to adopt an intra-crowdfunding platform to encourage innovations and test their potential by allowing its own employees - which amount to about 430,000 - to invest in them. However, while IBM remains the only having experimented intra-crowdfunding for now, other giants found a way to benefit from this new tool. For instance, Sony saw crowdfunding as a way to spur innovation among its engineers and silently -i.e. omitting its name- launched a couple of crowdfunding campaigns for selected projects on external platforms, to test the market demand. As a result the company launched two new products on the international market. In Italy, instead, a big telecommunication firm opened its own equity crowdfunding portal with the mission to help local innovative startups to get financed and grow also thanks to its connections and expertise.
To conclude crowdfunding is not just raising curiosity among financial companies and institutions. Also large consumer and technology companies are looking with interest at this growing phenomenon and, whether it is for testing the market, encouraging innovation or implementing a CSR strategy, some of them have already found a way to use it.
Hogg, S. (2014). How Venture Capital and Crowdfunding Can Be Mutually Beneficial. The Entrepreneur
Mochizuki, T. (2014).Sony Looks to Crowdfunding As Way to Test Ideas. Japan Real Time
About the author - Irene Tordera
Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives.
During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem.