My Thoughts on Crowdfunding…

While The JOBS Act may have just passed this week, Crowdfunding has been scaling since 2008. The masses continue to scream about ‘Too Big To Fail’ while their 13-year old smartphone native niece is crowdfunding her third startup on Facebook. I am a strong believer in Crowdfunding. I live and breathe it. I am also a strong believer in ‘know Your client’ and as an investor in so many startups and stocks over the years ‘buyer beware’.

While America continues to lick its wounds from stupid borrowing, Citibank, Bank of America, France, Italy, Spain and Greece…the few crowdfunded their way to recovery. They used the social web, the social graph and what I call ‘Social Leverage‘. They have embraced what I call ‘Too Small to Fail’. They are coding, hacking, mentoring, accelerating and attacking at a relentless pace…at angles that can’t be defended. In 50 years, we will all work for ourselves and as Naval says…plug into an API somewhere to produce, consume and transact. Citibank is redesigning their offices with TARP money to attract young talent…but the talent is networking on places like AngelList to work at a startup that will bleed them to death slowly.

Citibank and Bank of America are Yahoo with ATM’s and pillars. Goldman is not going anywhere no matter what we fine them or how many passed over partners learn to use Tumblr. They survived and we need to get over it. It is Apple, Nike, Starbucks, Intuit, Schwab, Linked In, Facebook, Google, Interactive Brokers, Visa, MasterCard, American Express (yuck), Silicon Valley Bank and a slew of other companies you have never heard of yet that will rule the future. Figure out how to work for them or start a company that gets in their grill!

The terms ‘angel investing’, ‘social network’, ‘crowdfunding’ and now ‘big data’ have tipped. Crowdfunding the term is not new. Here is Wikipedia on the subject. The charity industry has been using crowdfunding forever.

We have an almost perfect storm for startups:

1. Governments are printing money (liquidity)
2. Election Year
3. Social Graph
4. Smart Phones
5. The JOBS Act

I would expect some crowdfunding setbacks including ‘crowdscamming’ of course, but the criminals have been using email and the phone for decades now. I hope we can focus on enforcement of the rules rather than pandering for more rules to slow the inevitable down.

If you don’t yet understand the power of crowdfunding, go spend $100 on Kickstarter (indirect investor), GiveForward (investor). These are examples of #winning.

Don’t chase crowdfunding in 2012, but learn how it works and embrace it. It’s not early anymore, but it’s definitely not late.


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  8. TraderMD says:

    Love the post… aside from the jab at $AXP :)

    My favorite line: “They are coding, hacking, mentoring, accelerating and attacking at a relentless pace…at angles that can’t be defended.”Personal growth is key in every dimension.

      • Finance Addict says:

        Amex is one of the few, if not the only, “tarp monkey” that gets social. Very interesting. 

        Re crowdfunding generally — totally agree. I regret that the JOBS Act included fraud-friendly accounting provisions but I’m super excited about the possibility of using CF for good, not evil. Kickstarter gets more $ to artists than the National Endowment of the Arts. This is a signpost to an amazing future.

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  13. Why not break up or wind  down a company like goldmen sachs along with citi group and bank of america. These companies know that government will always bail them out if they ever get into trouble again because of their enormous size. And. because of the fear that senior government officials have of the failure of one or more of these large financial concerns could bring down the whole economy. This just encourages more irresponsible behavior.

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