Exactly what is Crowd Funding?

The Power of the Crowd

Does anyone remember Marillion? They are rock band from Aylesbury who had a number of hits in the mid 1980’s and who still have a loyal and not insubstantial army of determined fans. Now, most bands have fanatical support but few bands can muster that support as Marillion have done in the past. Way back in 1997 they needed money to tour the US. But way back then they weren’t as successful as they had been 10 years earlier and access to the money was harder to find. Then someone in the fan base struck upon the brilliant idea of asking the fans to help. Fortunately, there was the internet and email and before long the $60,000 required to underwrite the tour was raised. This mechanism was then used to raise more funds to allow the band to record several albums over the coming years. Fan power, indeed.

Linking the Crowd to Business

This early example of crowd funding is an interesting one. It shows that ordinary people, who can see a reasonable return from their money - seeing the band live or accessing a new album in Marillion’s case -, will put their hands on their mice and invest. The key is the ease with which this can be done, the small amount of investment required from each participant and the interest in a possible return that can be gained in the future.

It has taken crowd funding many years to become more than a flash in the musicians’ pan. It has taken a global financial crisis combined with the stellar growth of businesses such as Google, Facebook and Twitter to make the business community aware that there are alternative ways for small businesses in particular to raise the finances they need to become established and successful. 

Government Backing

Now crowd funding is moving into the mainstream, particularly here in the UK where such investments in return for share capital is permitted and schemes such as EIS actively encourage angel investors to support small business growth. Even recent noises from government seem to be encouraging crowd funding as a legitimate alternative to hard-to-find and expensive bank lending. And as its popularity starts to increase, people who would not have thought of themselves as traditional business investors are interested in getting into potential high growth companies at an early stage hoping they become significant game changers. With investment levels starting at £10 the new investment community could become massive with everyone becoming a potential 'armchair dragon' and supporting small business growth in the UK.

First North East Business now on Crowdcube

UK businesses such as uBrands are ideally placed to benefit from such financing. Not only does the business have a strong base build on extensive IPR and trademarks but it has found a niche opportunity that will change the way small businesses across the globe attract their customers. It just needs the funds to make it happen. Sites such as crowdcube.com are the perfect place to bring together this new investor community with the small business with great thinking that need access to finance. Welcome to the brave new world of crowd funding. Or as Marillion might say, ‘A penny for your thoughts’.

Smart Marketing 2.0 - The revolution is on its way......

The internet shook up the world of information and business in the 1990s. Just as radio had revolutionised mass market communication in the 1920s, 1930s and 1940s, and television in the 1950s and 1960s, now businesses and their customers had access to new electronic means of providing and consuming information. A new revolution was dawning and it was one that was going to change fundamentally the way commerce worked. Back then at the end of the 20th century, so much was happening so quickly. Too quickly for some, as it turned out. Fortunes were rapidly made and then lost as the dot com bubble burst.

Some companies did survive into the new century, businesses that got the focus right and were in the right place at the right time. A few identified an opportunity and had the guts to go for it at all costs. Many of those survivors are now household names around the world

Keeping it simple

The best businesses keep things simple. They take the good elements of traditional business and do them smarter. They use new technology as an enabler of growth. Their view is: get your sales message and price right, get it out to your target market in the right way, provide a great product or service - and your customers will come. And come back for more.

Such businesses were now using the web as the latest means of pushing marketing communications to prospective customers in the same way as radio and television had been used in the past.

Then Facebook came along and changed the game. Social networking had, in fact, been with us for at least 100 years as a study of how individuals can be linked together in social groups with similar goals and beliefs. What Facebook did was to use the technology of the internet to enable people to interact with each other on-line and share what they were in to. It was new, fun and had immediate appeal.

Interestingly enough, Sir Tim Berners-Lee, the inventor of the World Wide Web always intended the web to be about collaboration and contribution. However, it took businesses such as Facebook to give ordinary people the confidence and means to use the web to express themselves. And once unleashed, these ordinary people would never be silenced again. The rise of what is now called Web 2.0 i.e. websites that allow people to create their own content and interact with others, has been rapid and extensive, and now affects many parts of our daily lives. Even the law is being reviewed in light of the power of Twitter.

Serving newly-empowered customers

Amid all these changes, businesses have been forced to look for fresh ways to serve their newly-empowered customers. They now actively encourage on-line feedback for their products and services and use the new Social Media to interact more fully with prospective customers. Marketing has embraced the likes of Twitter, Facebook, YouTube and LinkedIn to ensure that businesses are best placed to engage with the new generation of active consumers.

But some principles have remained the same. Marketing communications is still essentially one way. It is still about defining what you have to sell and pushing that message to prospective customers. Even with the recent rise of daily deal sites, such as Groupon, the principles are the same. It is all about pushing products and services from businesses to consumers; about spending money on marketing communications campaigns that may not be effective; about relying on the consumer to research and negotiate the best deal using search engines, websites and the telephone.

Although the Web has moved from passive consumption of information to fully interactive consumer engagement, marketing has not. Marketing, despite the efforts of marketing companies to push a different message, is still stuck at version 1.0.

Meeting the unmet needs of consumers

That is all about to change. What has been missing from the marketing equation is access to the unmet needs of consumers. Without that information, companies use the scattergun approach, blasting out their product information in the hope that they will hit a consumer who needs the product. After a while many of those prospective customers begin to resent being assaulted with information that is irrelevant to them and are actively turned off by it. This actually reduces the chances of them buying from the company concerned.

The opposite of the traditional Push Marketing is Pull Marketing. This is all about satisfying customer demand and is often linked into creating a product only when a demand for that product is actually identified. That may be appropriate for the manufacturing of a new model of car but does not work for the design of a new pair of spectacles or for the hire of a van. Something much smarter is required.

Smarting set to revolutionise marketing practices

Smart Marketing 2.0, or Smarting for short, is a revolution in marketing equivalent to the impact of Web 2.0 on the internet. For the first time, consumers who have been empowered by the ability to create content and interact with the web, can now define their actual needs. And they can be specific about them too. They can record not only what they want, but where they want it, when they want it and how much they are prepared to spend. And businesses can have access to that unmet need and respond either generally to that type of need or specifically to that need in particular with offers that meet all the required criteria. And they don’t have to pay for the privilege of making the offer either. They only pay when the actual sale is completed. Think of it as marketing on a commission basis.

This new Smarting paradigm is being driven by a British company called uBrands. Their technology platform, backed by extensive brand trademarks and IPR, not only enables consumers to register their various needs in one account but also allows businesses to register their product and services and be advised in real time of the unmet needs in the areas that they serve. It also allows businesses to present assets, product or services they may have that are available at a specific time to consumers looking to use them. An example would be a skip hire company who have spare un-hired skips available on a Tuesday. They will be able to present them in a way so that consumers can see when they are available and at what special offer price, and enable them to make the sale immediately. And they will only pay for this service when the deal is done.

Create a Need Portfolio for life

As consumers gain trust in the model they will have the confidence to create needs for all sorts of things in their lives; getting a job, opening a bank account, moving home, getting married, going on holiday etc. Each need has a subset of individual needs each with their own specific requirements and budgets. For example, getting married often involves clothes purchase or hire, venues, florists, photographers, cars, holidays etc. each of which has a budget and all of which have a specific date. And since individual consumers are also consumers within larger groups, such as societies and clubs and even at work, the opportunities are endless. And none of this would be possible without the rise of Web 2.0 and the change it has had on consumer engagement. Smart Marketing 2.0 is here at last.