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  1. #1
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    Jul 2012

    Equity CrowdFunding's Future Impact on the US Economy

    Equity CrowdFunding's Future Impact on the US Economy

    By: Brian Krassenstein

    Although the US economy continues to sputter along after the "Great recession" of 2008, there is new hope, which has slowly begun to trickle in. That hope comes in the way of Equity Crowdfunding, which was introduced to us by way of the Jobs Act, signed by President Obama last year. Although we continue to wait for the SEC to produce a set of guidelines and regulation to the new funding model, we have already seen non-equity crowdfunding create jobs, as well as bring forth a number of great products and ideas. Once we see Equity crowdfunding take off in the US, those numbers will only increase exponentially. Here's why this new funding model will, not only be a boon for the economy going forward here in the US, but also have a tremendous impact on the global economy as a whole.

    Innovation Can Finally Take off

    Think back throughout your life, at times when you thought of a crazy idea for a product or service, but just didn't know where to start, or how to come up with the most crucial part of any new business's laundry list of needs, start up capital. Well, with non-equity crowdfunding we have already seen projects garner the attention of the masses to surpass their funding goals. Whether it's Ouya, the video game system which generated millions in funding, or the various other million dollar projects we have seen throughout the last year on Kickstarter, and Indiegogo, these projects all likely would never have succeeded without the interest, publicity and funding from the crowd. Instead of dreaming about creating a product which would make the lives of thousands of people more enjoyable, or easier, everyday people like you and I can actually put those ideas onto the internet, and if enough people share that vision with you, you can watch them take off. Innovations which would never have seen the light of day are now being funded and brought into the marketplace. Innovation usually leads to increased productivity, and thus a stronger nation and economy. The crazy thing is, that we have only hit the tip of the iceberg, and as equity crowdfunding becomes a reality, even more innovative individuals will appear seemingly out of nowhere.

    New Ideas, New Products, New Jobs

    Without a doubt the economy is losing jobs to automation. Store clerks are being replaced by automatic checkout machines, and warehouse employees are losing their jobs to robots. This trend will continue to progress. Having said this, new jobs will be created as new ideas and innovation appear on the scene. Maybe those store clerks will instead become customer support personnel for the latest new video game platform, or perhaps they will be trained to manufacture those very machines that took their jobs in the first place. As equity crowdfunding takes off, new technologies and new paradigms will take hold, creating new jobs that could not have ever been imagined 5 or 10 years ago. The Pony express lost out to the telegraph, and those people working in those industries lost out to the telephone, which eventually lost out to the internet. Old jobs fade away while newer, more productive jobs emerge. There is no bigger catalyst to job creation than the creation of new companies, products, and entire industries, which crowdfunding is beginning to produce.

    The Little Guy Can Now be the Venture Capitalist

    We have all heard it before, "The top 1% controls most of the wealth in the economy." Well, this will change in the coming years. As equity crowdfunding begins to replace venture capitalists and angel investors, the everyday Bob and Sally's of the world will be able to invest into emerging technologies and companies just as quickly as the Hedge funds and mega millionaires of the world can. Income inequality will always be an issue in this country, however, with the changing laws and allowance of equity funding, we will hopefully see the gap narrow considerably. Imagine if you could have bought into Twitter or Facebook within the first year or so of them launching. This will now be a reality once equity crowdfunding is legalized for not only accredited investors but everyone alike.

    The next 5 years will certainly be interesting. The filtering out of scams and fraudulent investments will only be one of the hurtles we will have to get past, however without a doubt equity crowdfunding models will usher in a new era of financing. An era which will not rely almost solely on the banking system to provide us with funding for our ideas. By 2018, the crowdfunding industry will give the banking industry a run for it's money, literally.

  2. #2
    Senior Member
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    Jan 2013
    FREE TIPS to double your money in crowdfunding industry:
    I believe 2013 is the year of crowdfunding, this might change the future of world economic

  3. #3
    Agreed, but the $1m limit is a big problem. Until we get that to at least $50m it'll remain one.

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