The buzz around Crowdfunding has been significant since the passing of the JOBS Act a little over a year ago. The majority of this media attention has gathered around the potential for startups and small businesses to finally gain the funding they need to grow. Joy Schoffler brings up an area that has not been focused on but deserves our attention for publication Bankless Times: Enterprise-Level businesses.
“Many big businesses are notoriously slow adopters of new technology, including social media.
One of the reasons for this is the regulatory minefield that inevitably forms around anything new, particularly with the capital markets and financial services.
However, with social media being as ubiquitous as it is, companies large and small have acquiesced to the times and are aware of the importance of fostering a sense of community and engagement with their members. Banks, for example, are attempting to build a sense of community around their brand through social media in the face of bailouts, increased fees and the resulting public backlash that unavoidably ensued. Crowdfunding will take this dynamic one step further.
The communications field underwent a shift a few years ago; customers and fans drove out portions of the conversation that used to be set by Madison Avenue advertising firms. Crowdfunding and crowdsourcing are the latest result of this phenomenon.
Companies are now able to support charitable and community initiatives, conduct massive market testing and even pre-sell new products and service lines directly to their customers through crowdfunding and crowdsourcing platforms. All the while they are generating goodwill toward their brand.
Soon they will be able to sell securities to fund their companies via equity-based crowdfunding thanks to certain provisions in the JOBS Act.”