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Crowdfunding : A Contrasted Landscape

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The notion of crowdfunding appeared in 2007, with a visionary french entrepreneur who created My Major Company, the first website designed for crowdfunding.

The crowdfunding allows everyone to launch a project, with the financial aid of an optimistic community. For example, Grégoire is the first artist produced by French people, due to crowdfunding. But this was nine years ago. The landscape became foggy since then.

My Major Company stopped the creation of new projects in March 2016. Other platforms are trying to survive but leaders such as Kickstarter are slowly absorbing the whole market.

What happened ?

Crowdfunding was part of the Social Web Revolution, allowing people to connect with a project creator, to discuss, finance and participate. It is the first time that a project is carried by an anonymous crowd. But it remains an unknown activity, on a niche market. Did you ever see a crowfunded product at the supermarket ? I think not. Retailers are still running business with their old habits, they need their margins, they work with brands, not with a random crowdfund person, they need guarantees.

Even if all the conditions are met, crowdfunded projects don’t have access to the roten world of margins and retailers. The crowdfunding platforms are trying to solve this economical equation in order to insure a projects core, with enough fans to sustain their activity.

How do platforms remunerate themselves ?

They take an errand from 5% to 8% on every fullfilled project. Because of the actual size of the market, this economic model does not fit for a long term strategy. The hype is over for this industry and it needs to reinvent itself. Some platforms are already moving on crowdequity, crowdlending and other activities. If they do not, they will simply disappear.

Why is Kickstarter so powerful ?

Has the leader of the crowdfunding industry, Kickstarter owns the biggest community and a international visibility. The best creators go where the grass is the most green. That’s why its difficult for european actors to fight back. But even Kickstarter is in a wobbly position. These platforms should have uberized the retailing industry and they failed, because, in a way, old retailers didn’t collaborate.

Is crowdfunding dead ?

In order to uberize the retailing industry, crowdfunding needs to reinvent itself, obviously. In the first time, european platforms could gather, in order to balance the industry. Then, the retailing “old school” rules should change. One day, supermarket shelves will overflow with all these innovative products we see on social networks. Crowdfunding is a step torwards a more sustainable and ethical economy.

 

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