The Tipping Point

Crowdfunding

 

The recent huge success of Pirate3D raising more than USD 300,000 in just 1 day for their new Buccaneer 3D printer is validation that crowdfunding works! It has also made many skeptics sit up and think about the potential of crowdfunding in the economy.

 

Using text-book analysis, Pirate3D indeed has a compelling unique selling point: quality and affordable 3D printer in everyone’s home! Go to Kickstarter and see for yourself the range of benefits and amazing features that Buccaneer offers against its competitors. Other factors such as a well-articulated business plan, strong team, product-launch timing, also contributed to the success. But are these all the ingredients needed?

 

The above points serve as mere rationalization for the investor to participate. The emotive aspects are key. The idea of putting a 3D printer into everyone’s home at an affordable price evokes great excitement into people. Pirate3D made the connection, Kickstarter provided the empowerment. Collaborative consumption works because humans are intrinsically social!

 

Crowdfunding has evolved rapidly and now permeates every aspect of our lives – it’s used by charities, businesses, startups, social enterprises, real estate, equity, loans… (more?) And considerations for investors and borrowers to participate vary across the different forms of crowdfunding.

 

In P2P lending, the decision to lend is not merely mechanistic but human. These are accounts from U.K. investors:

I used to run a small business, so I liked the idea of lending to businesses. I know many are having a tough time at the moment with the banks not lending, so it’s good to be able help in this way. I started with £500, but was quickly impressed and topped it up to £10,000 and I’m now getting an average gross yield of 9.5%. (FundingCircle)

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It made me think: why can’t I become a Lender myself and bypass the middle man? So I have decided to abandon the banks and lend my money out through Peer to Peer lenders like Ratesetter.

In a recent online survey of U.S. p2p lenders, Simon Cunningham found Five Reasons Why People Are Interested In P2P Lending.

They are:

  1. Ethics
  2. Returns
  3. P2P Lending is the Future
  4. Bypassing Banks
  5. Feeling of Control & Less Risks

Earning a return is not the only dimension. Connection and empowerment are the tipping points for the P2P lending movement!

What do you think?