In addition to its large-scale social dimension, crowdfunding participates in supporting business and promoting entrepreneurship. It is a market for existing businesses looking to expand or those in the process of being created. It participates in developing an alternative economy by proposing to promote projects with high potential. It intervenes upstream of, or as an alternative to, traditional funding, which is still unwilling to support entrepreneurship without upfront guarantees on project viability.
For companies in the creation phase, crowdfunding acts a confidence lever. Faced with the popularity of a project, validated by individual contributors, banks are more included to agree to a loan. This also means that companies do not need to rely on a single source of funding and can diversify their investors.
As for existing companies in the development phase, it is a way for them to raise funds, raise public awareness and promote their project. The communication phase on a funding platform should to be handled carefully since the whole campaign will rest on the company’s ability to propel their project to this enlarged community. The quality of a crowdfunding campaign depends on the viability of the project and its future notoriety.
Crowdfunding and open innovation as business development tools
As well as seeking funds, proposing a project via a crowdfunding platform is a way of testing a product or service, validating an idea and analysing what works. A good product will keep contributors’ attention and allow the company to carry out market research and form its first customer base.
It is also an opportunity for alternative communication. A “crowd” with greater awareness of a product seems an ideal audience for trying out new marketing plans. Beyond raising funds, the contributors, if solicited, can be a source energy, networks, information and ideas, that they mobilise and pool for the success of the project in a mixed crowdfunding/crowdsourcing strategy.
Another business development tool is the rise of open innovation. Developed at the start of the 2000’s, the concept of open innovation refers to an innovation process based on sharing and collaboration. Open innovation, among other things, brings together actors likely to be able to collaborate and innovate together. Eyeka, for example, acts as meeting place for creators and companies seeking to improve communication and marketing operations.
With new technological and collaborative innovations, businesses are no longer limited to their own R&D department, but are looking for synergy in skills, expertise, and ideas, opening up to a range of external actors (researchers, corporate partners, customers, students, etc.).
The principle of the idea box emerges from these new trends, which are breaking away from “closed innovation”. Companies must continually adapt to changes in their market, meeting customer expectations as closely as possible has become essential.
An online idea box means that collective intelligence can be used, gathering the best ideas, as close to the ground as possible, quickly, and at little cost. More importantly, customers feel listened to and involved, they take ownership of the brand and can become its ambassadors.