Proponents Emphasize Social and Economic Importance
Barry James, the “father of UK crowdfunding,” believes that crowdfunding will be an essential element in building a new economy. This tool will allow entrepreneurs to finance new businesses without the barriers raised by traditional financers. Using crowdfunding, people will be able to invest a small amount of money to support a proposed business or project. He sees crowdfunding as being an obvious extension of the younger generation’s reliance on social media. They will want to control and direct their investments rather than simply hand their money over to institutional investors.
Mr. James effectively argues that the transparency provided by crowdfunding will provide a safe playing field and will discourage fraud. By opening crowdfunding to equity investors, it will foster job creation, inclusivity, and democratization of financing.
I also spoke with Barry Sheerman, a Member of Parliament who spoke about the 1 million unemployed young people in the UK. Mr. Sheerman believes that crowdfunding can help them finance projects and get new businesses running. He would like to see this start at the University level where students would get involved in rewards based crowdfunding—acquiring the experience and skills necessary to use equity funding later on to finance their own businesses.
A major fundraiser, Mr. Sheerman also explained how crowdfunding supplements funds provided by traditional donors. Following the 2008 economic crisis, foundations, wealthy individuals and corporations had less money available for charitable causes. Crowdfunding can make up the difference by raising money through small donations from large numbers of supporters.
For more information about what is going on in the UK and other countries, listen to the Summit’s Global Track.
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