What skeptics fail to realize is that the motivations of crowdfunding “investors” are different: These are not quant investors looking to maximize financial returns while minimizing risk and volatility.
One market that has always seemed immune to disruption (as popularized by Clayton Christensen in the Innovator’s Dilemma) has been the market for money itself.
While all sorts of companies were being disrupted — by fledgling competitors introducing lesser-featured products no one really wanted — those who financed the disruptors gained most. Venture capitalists and investment bankers reaped the benefits when those fledgling companies’ innovative features finally moved into mainstream markets.
But those days of benefitting, while remaining immune to, disruption are done. Because of crowdfunding, Christensen’s heartless yet proven principle is finally turning its steely gaze toward the very way capital is allocated and accessed. However, I’m going to argue here not just for the popular notion of crowdfunding as backing “projects,” but as backing people, too.