Has Crowdfunding gone crazy?

Has Crowdfunding gone crazy?

Savers and investors are now turning their backs on the banks in search of higher returns for their investments. Their answer lies in the new alternative methods of finance; peer-to-peer lending and the power of crowdfunding.

For those who are not yet aware of these terms; peer-to-peer lending involves combining the methods and processes usually preformed by the banks with technology; thus allowing individuals to lend money to others through an online platform. The UK’s first platform was Zopa and launched back in 2005. Since then the phenomenon of P2P has taken over with several new platforms joining the race to provide the best returns for their lenders and borrowers. Crowdfunding works on a similar basis; it allows individuals to seek funding from the crowd. It has now been established as an alternative source to traditional finance across a wide range of sectors. Crowdfunding is giving the public the power to decide what they want to invest in and has helped open up the market to businesses and charities who have previously struggled to access the finance they so desperately need.

But has the merit of crowdfunding been called into question?

The latest, and almost infamous, Kickstarter potato salad campaign has caused serious backlash for the reputation of crowdfunding. Some are calling it a joke, a misuse of the platform’s purpose and ultimately giving crowdfunding a bad name as a result. The original crowdfunding campaigns were built for the speed and effectiveness of fundraising for charities, helping to improve people lives and giving them more opportunities. But as happens with most new concepts, there is now a question mark over whether the use and the original purpose of crowdfunding has become diluted.

Should there be more restrictions over what can and can’t be crowdfunded? Some might say the potato salad campaign is a great example of the power of the crowd – after all, they should be the ones who decide where they put their money and so it should be down to them to decide what should and shouldn't receive funding. Not the authorities or the platforms owners. But on the other hand the crowd needs protection from misrepresentation or just pure stupidity.

Perhaps these crazy crowdfunding campaigns are just a result of widespread enthusiasm for the crowdfunding concept. Perhaps over time the original purpose of crowdfunding will persevere. It would be great to get your thoughts.

Here at CrowdLords we are passionate about the potential of P2P and equity crowdfunding to really make a difference. It has the power to make a difference to markets, to people’s finances and to everyone’s lives. We believe people shouldn't lose site of the real purpose and meaning behind crowdfunding but yet remain open and adaptable to the choices of the crowd.

We are utilising the power of equity crowdfunding to open up the Buy-to-let market. We want to remove the barriers that exist so that more people can benefit. To us it’s a worthy cause and one that fits perfectly with the original aims of the concept.

To read more on the concept of crowdfunding visit these particular articles written by the Telegraph and Forbes.