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What is Crowdfunding and Why is it Important to Intelligence? - CrowdFundingPlanning.com - CFP

posted Apr 3, 2013, 2:56 PM by Andrew Manzo   [ updated Apr 5, 2013, 4:15 PM by David Khorram ]
Six more days...

If all goes well, in six days, I intend to launch my first game, Widget, on Kickstarter  (if you are interested in the game itself, you can get more info by clicking on this link).  Once launched, I will have 30 days to get "funded" by various "backers".  If I fail to reach my pre-designated goal, I get nothing at all.

That's how crowdfunding works.

Well, at least, that is how Kickstarter works.  Kickstarter is the oldest and most popular crowdfunding platform currently available.  For those of you unfamiliar with these platforms, you probably should be.  This is not just for entrepreneurs or people interested in entrepreneurial intelligence, either.  There are implications here for intelligence professionals at all levels of business ... and law enforcement and national security, too.   

Let me explain.  Kickstarter is by no means the only crowdfunding site these days.  IndieGoGo and RocketHub are two popular alternatives, but there are a growing number of these sites.  The pace of this growth is likely to increase in 2013 as new laws are set to come into effect that will allow contributors to take small equity interests in start-ups (the current crowdfunding model centers on what typically amounts to pre-sales of a product or service).  Forbes expects revenues generated by crowdfunding sites to double, from 3 to 6 billion USD, in 2013.  Increasingly, this is the way everything from music to games to books to electronics will be funded at start-up.     

Savvy intelligence professionals in the business world should be watching these sites for potential competitors that might emerge from successfully funded projects.  Likewise, given the underfunded nature of most start-ups, it makes equally good sense to see successful crowdfunded projects as a no-cost extension of your own R & D programs - buying out small companies with proven products may well be less expensive than developing them in-house.   Finally, understanding crowdfunding is going to be an increasingly essential element of providing entrepreneurs any meaningful intelligence support.

Law enforcement intelligence professionals should also be taking note.  While there is little evidence of criminal activity in crowdfunding activities to date, with an increase in money, crime is virtually certain to follow.  Fraud of all kinds, money laundering, illegal or unsafe products are all activities which the reputable sites work very hard to avoid but, with the expected growth, criminals will inevitably carve out new niches in the market.

While national security intelligence professionals might not be interested in some artist's new comic book, many of these sites either specialize in or actively promote innovative hi-tech product development and design.  In fact, some academics are even turning to crowdfunding sites to fund their research.  Everything from geo-mapping to verification of information on the internet to pens that can draw in 3D have been funded by crowdfunding.

Crowdfunding is both an innovative and disruptive practice that is set to become much more important in the coming years.  In my opinion, it is worth staying ahead of this particular curve.


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