Moving from Capitalism Towards a Giving Economy

People have used crowdfunding platforms for every occasion in their personal lives. From weddings, baby showers, vacations, medical emergencies and even funerals.

learn more about Chet Jain

By Chet Jain

Pixabay

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

There was a time when anybody needing monetary help, whether for starting a business or for fulfilling a personal need, one had to depend on moneylenders. Some could rely on well-meaning friends and relatives. In the absence of regulations, these sources of respite became more exploitative over time. Therefore, the need for regulated financial institutions like banks was felt. However, there are several cases where these institutions refuse to lend money.

What, then, are the options for a person in dire need of credit, but deemed unsuitable to receive it by an institution? Is there any alternative that ensures that the person in need is not exploited? Can you think of a morally, ethically and legally acceptable means of procuring the required funds? Over the last decade and a half, access to technology has given a makeover to an age-old method of raising funds. We know it today as crowdfunding.

WHY DO I CALL IT A GIVING ECONOMY?

At its very core, crowdfunding is much more than a simple monetary transaction. It involves a person gathering a relatively high amount he requires from multiple sources instead of one. The underlying difference here is that every contributor either gets something out of the "deal' or is genuinely looking to help.

Today, this method of fundraising is being used for setting up businesses, running nonprofits and everything between these two spectrums. People have used crowdfunding platforms for every occasion in their personal lives. From weddings, baby showers, vacations, medical emergencies and even funerals. Small entrepreneurs and artists have used it to fund their pet projects.

There are many experts who believe crowdfunding will become more of a mainstay in fundraising than an alternative to being tried in the absence of conventional sources. And, all this has worked because there are enough number of "givers'. What else would one call an economy fuelled by givers other than a giving economy?

IS CROWDFUNDING REALLY SUCH A BIG DEAL?

On first look at the platforms and the concept, it may not appear to be a revolutionary idea. After all, crowdfunding has been in existence for thousands of years. Technology has only changed its form and perhaps made it more accessible.

Let's take a look at some numbers, though. Between 2012 and 2015, the global volume of the crowdfunding sector rose from $2.7 billion to $34.4 billion, a fifteen-fold rise in just four years. In fact, there is some very optimistic projection of the sector, one which says it is expected to have a volume of $300 billion by 2030. No wonder then that the number of platforms providing this service has also increased from 700 in 2012 to more than 2000 today.

HOW IS THE MODERN DAY CROWDFUNDING DIFFERENT?

One definite game changer in making this possible has been technology. The chances of a campaign going viral, and gathering global acknowledgement are much higher on the internet.

Another prominent feature in this regard is the availability of several third-party platforms aka the crowdfunding websites. Most of them have in-house experts and are happy to help their "customers". One can, in fact, even outsource their campaign to agencies and experts who help with formulating marketing strategies.

There are four types of crowdfunding, dependent on what the contributors get out of it. They are lending, donation based, rewards based and equity.

THE PROMINENT PLAYERS

The number of active crowdfunding platforms may seem like a lot. However, each of them serves a definite niche or region.

Some platforms that have created a buzz in the crowdfunding space include Kickstarter, IndieGoGo. GoFundMe, JustGiving, YouCaring and Crowdera. Together, these platforms have totally transformed the way giving happens in the world. While some of them support artists and entrepreneurs in their projects, many of them provide their services to individuals in dire circumstances and even to NGOs.

THE INDIAN SCENARIO

In India, the crowdfunding sector is marred by legal hurdles. Donation and rewards-based crowdfunding have a total legal sanction. There are proposed regulation structures for the other two.

Equity crowdfunding, in particular, is being lapped up by most countries. As is real estate crowdfunding. The "Make in India' and "India Shining' waves will sure benefit a lot if the relevant regulations are put together soon. This will provide startups and businesses to take advantage of the phenomenon of crowdfunding.

THE ROAD AHEAD

I expect that more niche sectors will make use of crowdfunding in tears to come. Just like an unexpected discovery of its use in realty, we are yet to stumble upon other such sectors.

Just like digital monetary transactions are gaining ground in India, digital currency is becoming popular in other countries. Blockchain-based crowdfunding has been a much talked about phenomenon. And, I expect to gather more steam globally in the next couple of years.

We sure are looking at a future where crowdfunding is no longer an alternative source of fundraising, but a mainstream one.

Chet Jain

Founder at Crowdera

Chet Jain (CJAY) is a serial entrepreneur with an infectious passion for whatever he does. As a founder of Crowdera, he wants to spread his belief in the power of giving to create abundance around us. His current goal is to establish Crowdera as a dominant player in social good crowdfunding and nonprofit fundraising space. 

Related Topics

News and Trends

Scam 2023: Inside The World Startup Convention Disaster

To many, the speaker line up for the World Startup Convention (WSC) which had been scheduled for March 24-26, 2023 at Greater Noida may have seemed too good to be true.

Living

Why Embracing Your Unique Strengths and Talents Will Lead to Success

By identifying and developing one's strengths, aligning with passions, cultivating a growth mindset and positively impacting the world, individuals can unlock their full potential and create a life of abundance, passion and fulfillment.

News and Trends

Why Government May Ban Related Party Sales Of E-commerce, Food Delivery Startups

"E-commerce companies are permitted to merely operate a pure-play marketplace i.e. a bridge between the buyer and seller and not sell any goods, even their own products on their platforms," said Praveen Khandelwal, secretary general, CAlT

Starting a Business

90% of Online Businesses Fail in Just 4 Months. You Can Avoid the Same Fate By Using These Strategies.

It's not catastrophizing when we think about potential failure; it's in fact a chance for any business to precisely see any outcome and prepare in advance.

Growing a Business

Scaling Made Easy: How to Scale Your Business like a Fortune 500 Company

Once you have the night-vision skills of Fortune 500 restaurants, scaling becomes effortless. Here are 3 ways to scale, hidden in plain sight.

Leadership

5 Insider Tips for Improving Your Confidence as a Public Speaker

Presenting publicly can be a nerve-wracking experience. Here are five key tips to help you boost your confidence.