The growth in the use of online fundraising platforms has presented lots of opportunities for those with money to invest, those seeking funds and for the crowdfunding and P2P lending platforms facilitating their connection. However, as the market grows new types of intermediaries are also eyeing opportunities, providing anything from bespoke crowdfunding campaign consultancy, to services that aggregate lending or investment opportunities from multiple finance platforms. The emergence and growth of this ecosystem around crowdfunding and P2P lending can present opportunities for these platforms to evolve their business models as they seek to generate revenue in other ways.
The growth in crowdfunding and P2P lending brings with it a wealth of opportunities. While many point to the large number of platforms entering the market, another interesting development are the increasing numbers of businesses seeking opportunities at the margins of this growing sector. These include existing service providers such as law firms and accountancy firms setting up dedicated offers for this market, as well as new entrants seeking to serve the individuals and businesses using these sites.
The rise of the crowdfunding consultant
It is testament to the growth of crowdfunding in recent years that it has now become common for someone attempting to raise funds on a crowdfunding site to receive an approach from one of the many crowdfunding consultancies that have popped up. A Google search of ‘crowdfunding consultant’ will produce almost 13,000 results including lots of organisations and individuals offering to help you craft your crowdfunding effort and even some articles onhow to pick the best consultants.
This is perhaps not surprising. Failure rates on many sites can be quite high, and both those who have been through the process, and crowdfunding sites themselves, agree that crowdfunding is a skill, and that how well you master that skill will ultimately define whether or not you will be successful. These consultants largely offer advice on structuring your campaign and helping you reach potential backers. For inexperienced entrepreneurs with little pitching experience or for those without extensive networks, consultants could provide a useful service. Yet given the fact that they charge their own fees, ranging from success dependant commission to up-front charges or hourly rates, they are likely only to be a serious proposition for those raising larger amounts of money.
As well as consultants, there are others who are aiming to develop specialist services for crowdfunders. These include companies that will help you withdistribution if you have perks to deliver to backers, legal firms to help you with ensuring that an equity offer you have is compliant, production agencies that will help you make a video for your campaign, and distributors that will help you ship rewards you have promised to backers.
The platform aggregators
In addition to bespoke consultancies, there is also a growing number of online platforms that have been setup to better analyse and aggregate offers across multiple P2P lending and crowdfunding sites. This can make it easier both for lenders or investors to navigate opportunities posted on different platforms, and also for people seeking finance to find the platforms that best meet their needs. One example of the former is InvestUp, which is attempting to pool equity crowdfunding and peer-to-peer lending opportunities from multiple platforms in one place, while sites like Alternative Business Funding let businesses filter sites depending on their funding needs.
The potential to evolve business models
All of this is a sign of a healthy ecosystem developing to assist these alternative finance providers to deliver more value to their users. However it also offers opportunities for the platforms themselves. One of the platforms' strengths is that they act as a magnet for entrepreneurs with ideas, growing businesses in need of finance as well as good charitable and community projects. In time they may come to realise that their access to these businesses and entrepreneurs, and not their technology, is their key asset, and an asset they can generate revenue from.
Were the platforms to charge the service providers which are seeking to learn about and gain access to these fundraisers, their business models could rapidly evolve. Instead of charging those raising the funds a fee, platforms with entrepreneurs making new products could charge manufacturers for introductions, charitable platforms could charge large companies for helping them find CSR projects or platforms helping to fund growing businesses could make money by making introductions to other service providers. This could lead to an evolution of the market where many platforms move away from the standard model of charging those seeking finance a percentage of the amounts raised .