875RA Cloud Disrupting Capitalism? Crowdfunding under SEC Consideration
Author: Robert McNeill
A Cloud-enabled, socially-driven, emerging capital formation technique called Crowdfunding is showing signs of disrupting traditional capital investment and funding models, potentially changing how (and how quickly) new businesses come to market, and how established businesses fund marginal business changes (691MKT, Crowdfunding: Disrupting the IT Provider Investment Model, 19Jan2010).
The Wall Street Journal recently highlighted an April 6 letter from SEC’s Chairman Mary Schapiro, indicating that the SEC is re-examining Crowdfunding as a source of capital formation for small to mid-sized business. The indication is that the SEC is reviewing Crowdfunding as a way of capital formation for organizations looking to drive financing from individuals that give small amounts of venture money to finance company growth.
Mobilizing the power of the crowd via Cloud to raise funding has proven to be savvy marketing for new (foreign-owned) emerging technology providers like Trampoline Systems, and poses enormous opportunity for people, ideas and firms that possess an engaged network of customers / fans (see Note 2 for a list of companies that have leveraged Crowdfunding). Social Media technologies like video, blogs and twitter help illustrate project activities to drive giving and lend credibility and a voice to show how participation will support a project’s mission. These technologies can transform a traditional donor to an energetic ambassador as donors engage their online personal networks (806MKT, Just Good Business: Incorporating Corporate Social Responsibility with Social Media, 11Nov2010).