Credit to: beagleresearch.com
The new players in the market will try to change this picture. The first movers introduced the new funding model and educated shareholders about how crowdfunding works. The platforms grew extremely well, however, most of them did not innovate since then. Consequently, new players are entering the market with different approaches. There are platforms who made it a requirement that applying startups are based in a certain area or are operating in a certain industry. This should enable a better exchange between the startups and their crowd investors. Other platforms have other application requirements for the startups. For example, a British platform only accepts startups who have attracted already an Angel Investor who will co-invest with the crowd. The platform promises a more efficient process since the experienced Angel Investor will negotiate the term sheet. On the other hand, other platforms are trying to increase the benefits for crowd investors. A recently launched platform in Germany makes the crowd fund raise similar to an IPO: investors have to apply for shares and shares will get allotted. The advantage for the investors is that a specifically developed secondary market allows the crowd investors to sell shares to potential new investors.
Adapt or remain unchanged?
All these new platforms are trying to fulfill needs for fund raising startups or crowdinvestors which are currently not addressed by the market leaders. It will be interesting to see if the first generation of crowdfunding platforms will adapt their current business concepts in order to address those needs in a comparable way. Even though the market leaders might not address all needs, they do have the advantage of their market position and the media attention.
“Only the uncertainty is certain” - only the future can tell us who will be a winner in this competition. What is certain is that the crowdfunding market is still in its beginning and every stakeholder should be aware that current success might be helpful but is no guarantee for future success.
Photo credit to: Philipp Lucke. http://bit.ly/1j0wNk9
Originally from the north of Germany, Lars studied Finance in Frankfurt and Gothenburg. He has working experience in a broad range of finance positions, including a finance project in Abu Dhabi. Furthermore, he has experience at both sides of the funding table: he worked for a venture capital company in Hamburg and after a successful Series-A investment in a Fin-Tech startup in Berlin he supported this startup in their internationalization process.
In 2013, Lars has completed his graduate program in Entrepreneurship and Innovation which included a semester each in France, China and the United States. Lars currently lives in Hamburg and Berlin.