I have to confess, I've never believed in the camping by the White House -- trying to make the proverbial "Instead of cursing the darkness, light a candle" as my personal (perhaps idealistic) motto. Ultimately, just like many other entrepreneurs frustrated with a broken financial system that somehow got detached from society's needs and those who aspire to support them, I've converted myself into a crowdfunding educator and evangelist.
But if you are not interested in politics, it doesn't mean politics are not interested in you. I was recently honored to be invited to the White House which hosted the "Champions of Change" event -- this time with a "focus on entrepreneurs who exemplify the promise of crowdfunding to fuel the growth of startups, small businesses, and innovative projects across the Nation" as the White House press release revealed (for the full text and Champions' bios please click here). Among distinguished guests there was the Crowdfund Intermediary Regulatory Advocates (CFIRA), a leading crowdfunding organization that works closely with the Securities & Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) on setting up new industry standards.
A highly encouraging tone was set right in the beginning by Tom Kalil, Deputy Director for Technology and Innovation for the White House Office of Science and Technology Policy. He defined crowdfunding as an "inherently democratizing force for innovation and entrepreneurship" and acknowledged that "a new generation of crowdfunding platforms are on a horizon" (meaning investment-based crowdfunding platforms based on JOBS Act). Further revelations from the twelve Champions of Change - selected by the White House entrepreneurs-crowdfunders who sparkled unrivaled passion, intelligence and humbleness, made me conclude with the following points.
Crowdfunding is a true indicator of what the community needs are. I could not help but wonder if government officials are taking notes too. To me, each of the twelve Champions who revealed their stories, was a clear representation of what the community's current needs are - and where the federal government money might be shifted to. For example, the initiative of Adam Chase who launched the global crowdfunding platform Watsi where people in need can fund medical care, was a clear evidence that our healthcare system is still in crisis. Marcin Jakubowski, Ph.D., who started a Kickstarter campaign for the development of the Global Village Construction Set (GVCS) and Peter Platzer who crowdfunded a space exploration and education company, are both a living proof that science has been under-financed and under-utilized for years. The solar education project that has been crowdfunded by Michele Clark, made me realize again that we have to leave oil before oil leaves us. In short, all of the projects were clearly in a "social entrepreneurship" realm but alas clearly not fundable by the existing VCs or banks.
I am, therefore I crowdfund. For any small businesses, the two most widely used sources are owner investment and bank credit. I was not surprised to hear that practically all of the crowdfunding Champions have turned to the crowdfunding as a last (or only) chance to get seed money. Aurora Anaya-Cerda revealed that it took her "almost 4 years of being rejected by every single bank you can think of". After launching a 40-day crowdfunding campaign on Indiegogo (I actually bumped into Slava Rubin, the Indiegogo's founder, later at the Conference Center), she was finally able to open a bookstore that now is the only in New York featuring art and writing by Latino writers. Another celebrated crowdfunding Champion, Premal Shah, president and co-founder of legendary Kiva.org (that recently crossed one million's entrepreneur that received funds), stressed that 7 out of 10 businesses that apply for a loan today are being rejected. Now Kiva.org raises more than $2.5 million in crowdfunded loans from a global community each week. Kiva's Repayment rate is 99.01%.
I crowdfund because I care. To date, I have not met one single crowdfunder or anyone involved in this emerging industry with a common "all about money/all about me" attitude - and this is a refreshing change. At the White House event, all of the Champions were clearly aiming to make a difference first and foremost - or, to put it shortly, they cared. Amy Kaherl was a true example of not only passion but an admirable loyalty to her home-town Detroit where she launched a monthly fundraiser program and ultimately $30,000 raised went towards creative initiatives, 7 non-profits were created and 3 small businesses have been started. If you roll your eyes you must work for Goldman Sachs.
"Crowdfunding is so intensely American". I loved this statement made by another Champion, Andrea Seabrook. Crowdfunding is "so much in our roots, it is sleek, it is powerful and entrepreneurial, it is incredibly flexible and you take the power straight to the people who want to support you". Andrea raised over $100,000 in seed funds via Kickstarter and launched DecodeDC to "break a new path in journalism toward more honest coverage of politics and government". Let me just add that I am truly excited to see foreign born entrepreneurs as well as a practically equal ratio between man and woman in this industry. And if anyone has still a hard time accepting the fact that eventually (once the JOBS Act is being implemented) everyone (even "unprofessionals") will have a right to invest in private companies, think about a jury institution in the American courts. You've got my point.
Where is love? I was a bit surprised to see practically no media in the room or governmental representatives from SBA, SCORE or StartUp America. I believe crowdfunding is currently transforming from the cultural provocation and informal testing tool to a defined industry that is repairing the present injustice and, while it is still one tenth of the VC industry, the potential of the industry growth and its impact is highly scalable. Saying that, entrepreneurs like myself, Ruth Hedges and Dara Albright (to name just a few) would love to find a common ground and collaborate with governmental agencies on educating entrepreneurs and potential investors about crowdfunding. In other words, romanticizing crowdfunding is cool, but we all have some work to do.
This begs quoting Henry Ford, "Coming together is a beginning, keeping together is progress, and working together is success."
Stay tuned.
Victoria Silchenko is the creator of the Next Generation Entrepreneurship and Global Crowdfunding Forum and series of crowdfunding workshops "Debates On Crowdfunding". She is also the founder of Metropole Capital Group.