When UC Berkeley decided to offer its executive education course on corporate crowdfunding, some faculty members wondered what relevance crowdfunding had to major brands. Especially because the original intent of crowdfunding was to help struggling small businesses—not billion-dollar brands.

However, many companies are starting to realize that crowdfunding represents a unique marketing opportunity for forwarding-thinking companies to dramatically strengthen consumer ties with their brand. Crowdfunding can also be used to drive innovation, and it is the newest (and probably most effective) form of crowdsourced product innovation.

Crowdfunding is the collection of finance from backers (the "crowd") to fund an initiative, and it usually occurs on Internet platforms.

Since emerging in 2008, crowdfunding has become a multibillion-dollar global industry with thousands of platforms offering funding opportunities to entrepreneurs, community organizations, and lately major corporations, such as Dodge, Honda, Coca-Cola, American Express, and DC Comics.

Corporations with access to debt and securities markets don't need to use crowdfunding to finance operations for growth capital. However, what smart CMOs and CEOs have realized is that crowdfunding does a remarkably effective job in helping to drive marketing initiatives to existing customers and acquiring new customers.

Forget the hypothetical value of a social media mention, such as a Facebook like. When you can get a customer or social follower to contribute cash to a corporate-sponsored campaign, you have the deepest form of social media engagement possible.

What Strategic Corporate Crowdfunding Looks Like

The first model of strategic corporate crowdfunding is not to create an opportunity for customers to finance the purchase of your product for themselves but usually for a social cause or community organization.

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ABOUT THE AUTHOR
image of Richard Swart

Richard Swart, PhD is a leading authority in crowdfunding and runs the crowdfunding research group at UC Berkeley.

LinkedIn: Richard Swart

Twitter: @richardswart