Innovation is part of our DNA. For as long as society has existed, people have relied on innovation to exist comfortably in our environment, communicate with each other and push the boundaries of reality. With the boom of the technology industry in the past 20 years, our appetite for innovation has multiplied to outpace our resources. As the CEO of the world's first open crowdfunding platform, I sit at the intersection of the two main ingredients for innovation: ideas and capital.
The frequent disconnect between ideas and capital poses the biggest threat to innovation. Traditionally, technological innovation requires buy-in from financial institutions like banks and venture capitalists, and institutions are really good at saying "no." This means an individual or a very small group of people get to decide on behalf of the whole world whether or not an idea is good enough. My co-founders and I heard the word "no" a lot (93 times to be exact) when we first pitched Indiegogo to venture capitalists in 2007.
The importance of digital payment and social networks
Crowdfunding innovation couldn't happen without being able to pay for good and services online. We saw a major turning point in the 1990's with the explosion of e-commerce and digital payments. All of a sudden consumers could buy products online without having to go through their local retailers, or donate to nonprofits without mailing them checks. This revolution was certainly not without controversy, and as a result our society had to create new laws and establish standards to keep up with the innovation.
Likewise, crowdfunding innovation relies on the creation of online communities. The advent of social media in the last decade meant people from around the world and from all walks of life could network and interact. It meant establishing a public-facing identity was no longer an experience exclusive to celebrities and politicians. This newfound ability to socialize online introduced all kinds of new challenges around privacy and trust, but it also created novel opportunities for people to connect around shared interests outside of their everyday communities. In other words, we see virtual communities where ideas are exchanged and promoted.
The era of emotional commerce
When you marry digital payments with social networks, crowdfunding is their lovechild. The word "crowdfunding" didn't even exist back when we founded Indiegogo, but now in 2015 the term is becoming more and more a part of our modern vernacular. Our mission has always been to democratize finance and empower people to fund what matters to them, rather than the subset of ideas endorsed by the powerful and elite. If the goal of innovation is to make people's lives better, those people should be involved in deciding what actually gets made. I call this concept "emotional commerce."
Although we still have a long ways to go in widening bottleneck between creators and consumers, it's exciting to see how rapidly the adoption of crowdfunding has grown and how that's impacted our capacity for innovation. Similar to how big brands that formerly scoffed at social media now employ teams of social media strategists we are seeing big brands experiment with crowdfunding in an effort not to get left behind the next wave of innovation. By connecting directly with customers early in the product lifecycle, established companies and emerging entrepreneurs alike benefit from real-time feedback loops, tangible market data and the platform to build long-term relationships with customers. This system allows smarter scaling through data and ultimately leads to technology that better reflects the needs of its users.
It will be interesting to see how the recent regulatory developments will alter the tech industry landscape. And while I've always believed that equity crowdfunding will be an important part of the finance community's future, I don't think we've cracked the code quite yet for balancing protective regulations with unencumbered innovation.
That being said, as I look back on what we've accomplished over the last 20 years, I feel encouraged and excited for what's to come in the next 20. Together we are turning great ideas into reality every day.
Photo courtesy of Indiegogo