The Scramble to Innovate

A frenzied land-grab is currently underway in the alternative finance sector. Every other day brings news of a new platform, a fresh twist, and an ever-burgeoning space.   

a close up of a currency note

I stumbled, this morning, upon yet another spin upon the “traditional” crowdfunding model, in the form of CrowdyHouse – a crowdfunding platform for independent designers. Only two days previously, I ran into Farallon – crowdfunding for established brands. Before that, Crowdasaurus – building crowdfunding ecosystems, preceded by the discovery of SwimSwam – the crowdfunding solution for professional athletes. You get the picture.

Peer-to-peer lending platforms are sprouting up at a rapid rate themselves, but their number is not quite comparable to the throng of new crowdfunding sites. The multitude of innovations are born of the desire to locate a niche in the crowdfunding world, and, thus, to draw a specific set of customers away from the now-established crowdfunding giants (like KickStarter and Indiegogo).

But even among the most recent platforms there will be overlaps in intention. Farallon, as mentioned, will hone in on established brands. Fansflock, another late 2013 entrant, will seek to harness the power of the established fan-bases of popular brands to crowdfund projects. The two rookie platforms are disparate at the moment. Farallon feature clothing and equipment brands, whilst FansFlock take a more media-minded approach (film, games, music). But the two teeter on the edge of competition.

Not every trailblazer will survive. The best models will begin to expand at the expense of the minnows. That is part and parcel of settling newfound territory, and why this is so crucial a time for emerging platforms. It is also why all entrants are hell-bent on emphasizing their own uniqueness:

-       “We want to sell the fan experience. This is the main difference between us and everybody else.” – Massimo Colella – co-founder of Fansflock.

-       “This is not only a wonderful partnership between Fullscreen and Tubestart, but it’s also a great opportunity for our crowdfunding platform to continue to demonstrate its unique ability to serve the fans, followers and funding needs of the digital video marketplace.” – Joseph Holm – co-founder and CEO of Tubestart.

-       “Crowdasaurus provides a unique opportunity for businesses, nonprofits, and individuals to connect and profit together.” – from the Crowdasaurus website.

-       “We take pride in providing a more customer-friendly experience than most crowdfunding services — in the off chance that a backer receives a product not as described, we’ll give them credit towards a future project; or will work with the backer to make it right.” – Alex Blunk – founder of Farallon.

-       “We decided to set up a platform based on the principles of crowdfunding, tailored specifically for design. We wanted to do a couple of things differently. A designer no longer has to take into account store margins, this win-win situation is something we find very enjoyable.” – Mark Studholme and Suzan Claesen – co-founders of Crowdyhouse.

-       “Sponsorcraft is transforming university fundraising. Connecting students, societies, universities and alumni.” – from the Sponsorcraft website.

It is of course natural that young platforms should seek to distinguish themselves based upon their own unique proposition. However, as they flourish and scale, they will inevitably seek new audiences, offer new products, expand overseas, and become less specialized.

Crowdfunding in education is one of the sector’s more turgid brackets currently. Some platforms focus on student fees, some specifically on postgraduate funding, others on student initiatives, or on building bespoke, university-branded fundraising platforms. There are pledge-based platforms (Educredit, Medifund), rewards-based (Funding4Learning, StudentFunder), those which obligate borrowers to volunteer (ZeroBound), as well as a number of student-specific peer-to-peer lenders (Pave, Upstart,Prodigy Finance). How long will it be before a leader emerges amidst them – one platform which overshadows or incorporates the vast majority?

That same question may be asked of each branch of the rapidly developing crowdfunding world. AltFinanceNews will track with rapt interest which among the pack will rise above rest.

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