PRESS RELEASE California Management Review Publishes Special Issue on Crowdfunding
February 17, 2016
In 2014, musician and entrepreneur Jack Conte published a blog post describing the financials of his band Pomplamoose’s 28-day U.S. tour. Conte explained that despite selling out shows at many historic venues, the band actually lost over $11,000 on tour, providing evidence of the decline in the music industry. To combat this trend, Conte founded a new crowdfunding platform, Patreon, that allows supporters to send a defined amount of money to artists each time they release new material. He hoped that this would allow fellow creators to make a living in the new digital economy.
Conte is on the right track. Earlier this month, Patreon raised an additional $30 million in Series B funding. The platform joins a stable of successful crowdfunding websites like Kickstarter and Indiegogo, which have famously funded a wide variety of projects ranging from the production of albums and short films to 3D printers and smartwatches. While Conte’s success cannot be disputed, a major question remains: can crowdfunding become a solution for everybody, or just a handful of outliers?
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New Research on Crowdfunding
Popular opinion suggests that major crowdfunding platforms serve to democratize the process of innovation, enabling entrepreneurs and creators in a way that could not be supported under traditional models. But emerging research paints a more nuanced picture.
The popularity of crowdfunding among entrepreneurs and investors has opened up new opportunities that would not have been possible in the pre-internet era. For example, pre-sales on Kickstarter allow would-be creators to get a sense of demand for their product before investing heavily in development and manufacturing. Other crowd-based platforms like LendingClub actively seek to subvert existing financial institutions by facilitating peer-to-peer lending.
"Crowdfunding offers something other funding mechanisms do not—a way to democratize access to the capital needed to commercialize and distribute innovation."
As a rapidly emerging and evolving phenomenon, crowdfunding is still being studied extensively. A new collection of articles published in the latest issue of California Management Review highlights the strengths and weaknesses of crowdfunding as it exists today.
California Management Review is a leading academic research journal from the Haas School of Business at UC Berkeley. Published quarterly by UC Press, CMR aims to serve as a bridge of communication between those who study management and those who practice it, publishing research-based articles that address issues of current concern to managers.