So are we gonna call it “crowdfunding” or what?

Last week I had the opportunity to attend the CrowdFundUSA conference in Atlanta, GA. Although there were the usual outstanding panels about everything related to crowdfunding, one panel stuck out in my mind.

The participants on the panel included CEOs Brian Dally from Groundfloor.us, Megan Johnson from Sparkmarket.com and David Lillenfeld from Sterlingfunder.com. In addition, Rodney Sampson, the well-known author of Kingonomics and founder of the Opportunity Hub in Atlanta was on the panel.

The presumptive topic of the panel had to do with intrastate crowdfunding, an area that has created a lot of discussion, but little action, over the past year. But Brian Dally (a notably outstanding speaker) brought up the problem with the overuse of the term “crowdfunding”.

As Brian correctly noted, the word encompasses so much territory. From a simple bake sale to a rewards campaign on Kickstarter to lending for a real estate project, “crowdfunding” really ends up being completely meaningless. Brian passionately (and correctly) argued that the use of the word “crowdfunding” was actually offensive as it related to companies that only raised money from accredited investors. Only 7% of Americans have enough income or net worth to be considered “accredited”. Brian rightfully believes that only opportunities that are supported by a broad “crowd”, which by definition includes more than a small sliver of Americans, should be allowed to be called crowdfunding.

This discussion engaged the audience and the other panel members. David Lillenfeld stressed that one of the issues that faced Sterlingfunder was the confusion and comparison with Kickstarter, where instead of shares of stock people receive token rewards. Brian noted that the term “microlending” actually tested better against other terms when marketing Groundfloor offerings. Megan formulated the term “micro angels”, which seemed to generate enthusiasm with the group.

I personally think the term “micro angels” is extremely problematic. After all, micro = small. And angels suggests someone who is about to lose their money in a new startup. The resulting pitch doesn’t strike me as persuasive. “If you invest in equity crowdfunding, you will be a SMALL LOSER.”

But everyone on this panel was exactly right: the use of the word “crowdfunding” is too broad to accurately communicate the public’s investing opportunity and the incredible funding and marketing power to the companies that effectively utilize it.

So what do you think?

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Jonathan FrutkinJonathan Frutkin is CEO of Cricca Funding, LLC. He’s the author of “Equity Crowdfunding: Transforming Customers into Loyal Owners” which is available in paperback, Kindle and audio book formats.

One thought on “So are we gonna call it “crowdfunding” or what?

  1. Pingback: CrowdTimer | HOW TO ENGAGE THE CROWD

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