THE BLOG
01/31/2013 03:47 pm ET

Unlocking the Global Trillion Dollar Crowdfunding Market

Now here is the 1 percent that you do want to hear about! The world is on the precipice of creating a trillion-dollar crowdfunding market. In Australia, the ASSOB has offered a crowdfunding investment portal since 2005. In the U.K., equity crowdfunding is already in progress, with investment platforms such as Crowdcube and Seedups. And in the Netherlands with Symbid. The crowdfunding components of the American JOBS Act and the Italian Decreto Crescita are now in the process of finalizing the attendant regulation before securities crowdfunding goes live. Industry associations are popping up everywhere, including in Europe, Canada the U.S. (CFIRA, CfPA) and recently a World Crowdfund Federation spanning five continents. And if you want to get an idea where things are headed, look at the travel list of the leading crowdfunding advisory team, Crowfund Capital Advisors. Recently they've visited Colombia, Canada, Mexico, Italy, Turkey, Sweden and Dubai, with upcoming visits to Singapore, Malaysia, Hong Kong and Sydney. And they've secured a relationship with the World Bank to study crowdfunding as a way to unlock innovation in developing countries.

Think about the implications of shifting just 1 percent of long-term investments to small business via crowdfunding. In American alone, that would create a $300 billion market for crowdfunding (10 times the venture capital invested in all of 2011). Indicating where things are headed, for accredited investors there is IRAvest, the Internet's first equity-based Crowdfunding portal specifically created for self-directed IRAs. Now imagine the general public investing in crowdfunded small businesses through fund vehicles (as I blogged about in the 2010 3-part series, "The New Face of Venture Capital") or individual investments. That's a huge transformation in the small business financing landscape. At the 1 percent mark, globally this translates to more than a trillion dollar market. And how big is 1 percent? The average volatility of the S&P 500 was 0.62 percent from its inception in 1957 through 2010.

We now have a material amount of real data in crowdfunding. As it turns out, the fear, uncertainty and doubt was hot air. The transparency and social networking dynamics of crowdfunding have been excellent at keeping fraud near zero, to the point where heavy regulation will work against this new economic machine. It's not just the crowdfunding platform founders and bloggers taking this position. Legendary DFJ VC, Tim Draper (who created MeVC, "an early crowdfunding-style investment vehicle that, he says, was regulated out of existence") said recently at Techonomy Detroit, "I think we should just sunset all the laws and just move forward." We've seen a number of other members of the venture community getting behind the crowdfunding trend, such as Fred Wilson (Union Square Ventures) speaking at Grind in NY and Manu Kumar (K9 Ventures) in Venture Capital Journal Feb. 2012, "Having companies that have been proven out using crowdfunding will only create better pickings for the venture capital industry to come in and scale those startups."

To get to this point in crowdfunding history has taken some heroic efforts on the part of so many people. But as this space expands, we need even more leaders, from every continent to rise up and voice your support. Or as Tim Draper said, "The world needs more heroes." Indeed we do. So let's make this interesting and reward those who stepped up to the plate. I will personally see to it that the crowdfunding community creates a monument, indelibly recorded with the 1st 1000+ recognized people across each of four categories (investors, lawmakers, regulators and press), who will tweet out support for crowdfunding using their respective hash-tag (#ProCFInvestor, #ProCFLawmaker, #ProCFRegulator or #ProCFPress). The earlier you do, the higher your name goes on the monument. Take a stand. Be a hero. Be part of the trillion dollar crowdfunding revolution.