From the Sharing Economy to Equity Crowdfunding
Updated: Feb 21
How the sharing economy points to shared value in organizations
Will the next wave of the sharing economy be even more influential than the last? We‘ve shared everything from spare bedrooms to bikes, office space, and automobiles. And today, there’s a new way to share —which reaches beyond the boundaries of sharing stuff, and into sharing value.
While sharing assets created a boon in business, the sharing economy is just beginning to extend to sharing financial value. The sharing economy illuminates how these sort of marketplaces thrive—from value contributors, who in many cases are laborers, property or car owners, drivers, or hosts.
For example, Airbnb is one of the most successful hospitality companies in the world, yet owns no real estate. Uber is replacing the taxi industry, yet owns no cars. And to take a digital example, Facebook is larger than any other media company, and doesn’t have a single paid journalist.
The people who create the value, who are typically using their own resources, are often not compensated in the form of long-term value or ownership, even though they are foundational to the success of the organization. While the sharing economy provides an obvious reflection of this, most businesses operate this way.
Investments are held by a select few. Founders absorb the rest. Customers consume.
In the next wave of the sharing economy, value can be distributed where value is created. Customers, employees, and users can be community member owners, benefiting when the company benefits, regardless of the size of the company.
Enter equity crowdfunding
People are now able to come together based on shared value and shared values, intertwining their needs with a collective vision for the future, realizing dreams, and supporting one another.
Imagine a world where Airbnb hosts and Uber drivers were invited early on to be investors in the organizations they helped build. And that, even when autonomous vehicles replace Uber drivers, they earn substantial returns. Imagine that as Airbnb grows to an $100 billion dollar company, early hosts, who also invested their time and resources, share in that valuation.
While these sharing economy examples help illustrate what sharing value might look like, any company can empower their community to invest through equity crowdfunding.
Looks who is talking about this evolution
As Kevin Kelly states in his new book, “The Inevitable,” “…the new methods of equity sharing would unleash tens of thousands of innovative businesses that could not be born otherwise. The sharing economy would now include ownership sharing.”
And Douglas Rushkoff, best selling author puts it in his new book, “Throwing Rocks at the Google Bus” “The era of extractive growth is over. Rather, businesses must give people the ability to exchange value and invest in one another.”
Equity crowdfunding has been legal since May 16, 2016, and is regulated by the SEC. The space is emergent and growing. In fact, if crowdfunding keeps doubling year over year, the amount of money raised will exceed all sources of typical angel and venture capital funding.
How does equity crowdfunding work?
Equity crowdfunding typically works best with new companies who need early funding, have a viable business plan, and have a group of passionate customers.
Some platforms are more akin to the value sharing aspect of equity crowdfunding than others, especially when considering shared value alignment. For example, Republic explicitly looks for mission-driven companies and has helped underserved founders rally the crowd to get their respective businesses off the ground.
This is extraordinarily important when less than 4% of VC money goes to women and people of color. In addition to Republic, other leading equity crowdfunding platforms include WeFunder, Seed Invest, and Microventures First Democracy VC, which is running campaigns through a partnership with Indiegogo.
Examples of equity crowdfunding campaigns
Equity crowdfunding is a wonderful way for early adopters to support a product or service they want to see come to fruition. This could be anything from a local brewery to a device that would make life simpler, more mindful, and connected to other humans, like the Light Phone, whose maker is current running an equity crowdfunding campaign. If you invest $500 or more, you’ll actually get a Light Phone of your very own as a perk!
What’s great is that people actually say why they’re investing on Republic, so you can see their reasons at the bottom of each campaign. For example, a recent Light Phone investor, Ariel R. commented, “This phone is not just another product. It’s a tool to help us live better, happier lives. In a world too plugged in, we need to learn how to unplug to enjoy life itself and Light is the phone for that.”
Farm from a Box solves a different problem entirely, allowing “food made for the masses to actually be made by the masses” through peer-to-peer, off-the-grid farming. Farm from a Box makes this easy by sending a shipping container full of everything you need to farm several acres. This includes solar power, irrigation systems, and smart technology to keep track of operational efficiency. This kit can be used for food deprived areas, educational purposes in schools, creating small business farms, and for generating sustainable food sources.
Investment in something like Farm from a Box not only seems like a smart, global business opportunity, but also a way to support generative, healthy food sources and strategies to help alleviate malnutrition and hunger. This campaign successfully equity crowdfunded $135,543.
Krena S. who invested 8 months ago agrees, “I am a female engineering student and economist who understands health starts with the quality of food available. I love the creativity and solution to world hunger which addresses environmental concerns, local economies and cultural relativism.”
You can be an investor and invested, sharing value along the way
You see, you can be an investor and invested, sharing value along the way.
Equity crowdfunding provides a wonderful foundation for generating shared value in the form of ownership in addition to giving anyone who wants to the ability to put their money where their values are.
Backing companies you believe in, supporting founders and visions for the future that you like, whilst buying equity of the companies that you want to see come to fruition represents a deeper, more fundamental application of the sharing economy.
As business evolves to include customers as owners, we’re sure to see organizations that are more aligned with their stakeholders, incentivized to support those they serve. And as an investor, you’ll be part of that change!