As I experiment with crowdfunding for JadedAid, a card game to save humanitarians that I co-launched on Kickstarter, I wonder how entrepreneurs in the developing world could use similar crowdsourcing platforms to fund their ideas.
Luckily, infoDev at the World Bank has published "Crowdfunding's Potential for the Developing World" to explore this very question. In the forward, Steve Case points out why he's an optimist on crowdfunding:
I believe that equity, debt, and rewards-based crowdfunding open new possibilities for funding more entrepreneurs in more places around the world. These changes enable entrepreneurs to utilize social media and the web to offer rewards, ownership of a shared vision, or even equity stakes to potential investors.
Crowdfunding websites are creating transparency and more open communication by enabling investors to engage with these companies over time to monitor their progress and continue to support their success as the company grows. This technology makes it possible for an entrepreneur in Kenya to more easily engage investors and customers anywhere; whether that be locally, the diaspora, or with others anywhere in the world.
Now is the time for leaders in the developing world to engage in a spirited discussion and analysis regarding crowdfunding and how it should be utilized to benefit businesses and communities while providing prudent safeguards and investor protections. It may be possible for developing nations to use this new funding mechanism as a means to spur domestic innovation and create a larger number of high-growth entrepreneurs.
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Yet we still need to be pragmatists, and in the document, infoDev has a detailed guide for development organizations that want to launch a crowdfunding initiative in a developing country, and a high-level self-assessment tool for assessing a country's readiness for crowdfunding.
We also need to have trust, which infoDev rightly recognizes is the single most important element supporting a healthy entrepreneurial ecosystem. Trust – between entrepreneurs, funders, and customers – is based in relationships: the closer the relationship, the higher the degree of trust or distrust. Read this post for more information.
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