Relationship Between Social Media & Crowdfunding

By Katie Soo (www.ownyourhollywood.com)


Los Angeles, CA -- (ReleaseWire) -- 04/03/2012 --Congress just passed the JOBS Act and I can almost hear all the start ups and entrepreneurs in the world cheer in unisons. For those of you who are now just beginning to follow the trend of crowdfunding, read on. It’s a social media trend you’re going to want to know about as it continues to pick up steam in the social sphere.

We’ve seen the success of crowdfunding formulas like Kickstarter and Kiva, and they’ve demonstrated that a group of strangers all believing in the same idea can come together on a social media platform and fund a project knowing that they’ll get absolutely no return.

What if we changed that?

What if I told you your donation can now be turned into an investment and can swap out for some real cash in return for putting money in the pot?

Now that I’ve got you listening, let’s dissect how this affects the social model in simple terms.


- Find project you like
- Donate money to project
- Dependent on tier of investment, get a non $ reward in return


- Find a project you like
- Invest the dollar amount you were going to donate
- Get a piece of the profit – actual $

I don’t know about you, but I’m definitely more interested in the latter. Though it’s tempting to throw my hard earned money to an entrepreneur in exchange for a DVD or extreme gratitude from a guy I don’t know, it’s much more rewarding as a consumer to have true ownership of a project. And heck – if I’m paying for it, why shouldn’t I share in the profits?

Most of us who aren’t familiar with investment models or are an accredited investor can now take advantage of a new shift coming quickly through social media. This means for the first time in investment history, what you say as the consumer actually matters.

Let’s take Hollywood for example, indie films took on a life of its own with sites like Kickstarter and Slated. In the past, if you wanted to shoot a sci-fi film, you’d have to do one of the following: get into debt, use your student loan, borrow, or call in for some major favors. Now, artists can post up their projects with script, attached talent, full budget, and how much they’ll need. If the community likes what they see, they’ll donate to the cause and the project will hit their target budget in no time. Essentially, it’s another avenue for free money from people who want to support your work, but gain nothing in return. However, crowdsourcing is shifting that donation opportunity into a true investment.

Many are calling crowdfund investing the path to economic recovery. The way I see it? It’s a social shift in the way we perceive participation in companies and investments. Brands can no longer buy their audiences with traditional advertising – if you want the consumer to like your brand, you’re going to have to join the conversation. By doing so, you’re tapping into a database of 100s of millions of people around the world wired into a program focused on sharing. If Susie from Brazil saw a project and wanted to invest in through crowdsourcing, she opts in and a ping is sent out to all her followers on Susie’s social sites. Those who share her interest will join in the movement, and eventually, if it trickles far enough – it’ll create momentum using the trusted source of WOM marketing.

Now, like all investments in life, nothing is guaranteed. There isn’t a sure win with crowdsourcing, but the notion itself is new and has great potential to change the way entrepreneurs go about finding their first round of capital.

It’s a great way to leverage social connections to feed into projects that pique your interest and in the past, you wouldn’t be able to invest in. Now, with the new JOBS Act, that channel to accessing capital is starting to open for a lot of startups.

Do you have a company, idea, or product you’ve been sitting on for years but couldn’t seem to find a way to fund it? This is your chance. Stay ahead of the curve and find a way to gain market traction right now before the large social companies take over. You have a shot at making your dreams a reality, but this time – not through donations, hoping someone will have extra cash on the side for you – but rather as an official startup that can participate in a profit sharing model for all those who believe in your concepts. (http://www.ownyourhollywood.com)

To learn more about Own Your Hollywood please follow us on Twitter @OwnUrHollywood.

To learn more about the author please follow her on Twitter @katiekat.