Crowdfunding allows entrepreneurs and artists to kick-start their careers by providing an alternative pathway to raise funds. Usually, entrepreneurs go through the traditional venture capital model by finding potential investors. However, finding the sponsors can be challenging if the project appears too high-risk or abstract. Similarly, the commercialization of art and the pressures imposed by record labels on aspiring musicians often limit the artist’s creativity. Crowdfunding gives individuals the freedom to create and execute projects on their terms. As demonstrated by Amanda Palmer (2013) during her TedTalk, the fans are often willing to support the struggling artist. This exchange lets ideas that are deemed unmarketable by traditional investors reach its target audience (Sweeney, 2013). As a result, the market is diversified, and new opportunities are created, positively affecting both the economy and the community.
Since Amanda Palmer’s speech, crowdfunding has been developing and will likely continue to grow. The creation of multiple crowdfunding platforms allows individuals to maintain sizable intermediary prices while its rising popularity ensures reporting standardization. Additionally, the use of social media as a marketing tool and the primary business site helps normalize crowdfunding. Nowadays, many visual artists, photographers, and musicians are utilizing social media to do business. Social media creates awareness for struggling artists, allowing them to promote themselves and build an online fanbase. This relationship is especially beneficial for visual artists, who, unlike musicians or filmmakers, do not frequently collaborate with other creatives or play shows. As a result, it is more challenging to attract attention to their art and make themselves known. The built online relationships often lead to the artist’s fans becoming patrons (through Patreon) or supporting the artist through crowdfunding.
The rise of the crowdfunding age will undoubtedly diversify the investor pool. While it is unlikely that the need for bank loans and VC completely disappears anytime soon, the reliance on this form of funding will decrease (Sweeney, 2013). Since the community or the fanbase will directly support the emerging projects, it might create a better representation of the current market. Currently, investors usually represent 1% of wealthy individuals. While they employ marketing strategists to evaluate the risk of a potential idea, they often do not consider the funds of underrepresented groups. The support shown to Amanda Palmer demonstrates that even the most disadvantaged can be willing to invest if they genuinely believe in the idea.
References
Palmer, A. (2013). The art of asking [Video]. TED. Web.
Sweeney, D. (2013). Will small businesses benefit from SEC’s new crowdfunding Rules? Huffpost. Web.