From the Influencers

Looking for Tech Investment? Check the Crowd

January 11, 2016

From the major corporation developing its new product line to the lone tinkerer in his or her garage bringing something completely new to life, new technology comes from everywhere. One major new source of technology comes from crowdfunding, and a new report from Juniper Research suggests that crowdfunding is about to take off in a big way.

The Juniper Research report—titled “Crowdfunding: Strategies & Impacts for Technology Markets 2015 – 2020”—notes that crowdfunding represented about $1.1 billion in 2015. By 2020, meanwhile, that number would reach $8.2 billion. One of the biggest sectors to see growth here is the segment known as “equity crowdfunding,” in which technologies become not so much early adopters but rather investors, getting a piece of the technology in exchange for the donation. Given that traditional investment sources—so-called “angel” investors and venture capitalists—has been on the decline of late, that's good news for the technology market.

Currently, the clear leader in equity crowdfunding is the UK, which recently brought out new platforms for investment like CrowdCube. The United States is said to be one of the biggest potential new markets for equity crowdfunding as “less sophisticated” investors will likely be able to get in on this with new legislation. The other model—what's known as “reward crowdfunding”—will still be in play, though may take something of a hit thanks to things like the Zano drones issue.

The report's author, Lauren Foye, noted that equity investment was very attractive to investors, particularly those who were willing to take a risk investing in what may prove the next Oculus Rift or iPhone. Those investing in equity crowdfunding were essentially getting in on the absolute ground floor, being partially responsible for the development of such devices and therefore in line for a percentage of the take.

It's not surprising that people would want more options than essentially pre-ordering every piece of technology on hand; though there will be some who only want to go that far, why not open the field up to those who believe in a piece of technology's market potential sufficiently to put cash behind it? While it might be a bit riskier than normal investing, it might also have the potential for bigger payoff. It might also be more accessible than normal investing; while most investors really don't have much clue which stocks are better than others, valuable new technology can be more obvious.

We may still be a while off from widespread equity crowdfunding, but there's plenty of room for this concept to take off, and more than enough interest from investors. The idea that we could fund technological advancement and reap the benefits thereof when it takes off is compelling, and one that likely has many reaching for a credit card.

Edited by Kyle Piscioniere

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