Crowdfunding as an Emerging Method for Funding Product Innovation?


In June of this year, we posted a brief article about the emerging phenomenon of “crowdfunding” where money can be raised from a large number of people to support the development of a project, product, service, or business.   Since June, there has been sharp increase in the level of public discussion over the potential of crowdfunding and hundreds of equity crowd funding portals or platforms are cropping up.  I recently called perhaps the largest of these equity crowdfunding platforms, EquityNet, and spoke with the company’s founder and CEO, Judd Hollas to get his perspective on where crowdfunding is right now and where he thinks it might be going.

Crowdfunding has been described as a new way to expose and raise money from a large number of people.  What type of new funding opportunities might crowdfunding offer for companies that seek capital for growth?

JH: Companies will be able to seek equity, debt, donation, and reward-based capital via many crowdfunding platforms that focus on differing capital types and industries.

Should crowdfunding be considered a new paradigm for raising capital to support innovation and business growth, or is it primarily an additional “platform” that links companies with investors and sources of capital?

JH: Crowdfunding will improve the most limiting factor in modern capitalism – the capitalization of young businesses – and could unleash innovation and job creation as never before.  Crowdfunding is expected to increase the number of potential investors from 2 million to over 50 million and raise the amount of potentially available capital from $1 trillion to over $5 trillion.

By now, many people might be familiar with the story of Pebble Technology which raised more than $10 million this past May on an online crowdfunding platform, Kickstarter, to fund the development and production of its smart phone watch the Pebble.    Is this an example of the potential crowdfunding may offer in the areas of new product development and demonstrating market demand?

JH: Many crowdfunding platforms are going well beyond just offering capital to include a multitude of valuable resources and knowledge enabled by the participating “crowd.”  So, the collective wisdom of the crowd can offer feedback on new products or even serve as early adopters.

Besides hardware innovation, what other types of product development projects might attract capital through crowdfunding? 

JH: Crowdfunding can be used to fund just about any project or business.  Capital for film projects, startup businesses, alternative energy infrastructure, and even micro loans for a cell phone in Africa are occurring through crowdfunding platforms.

Will crowdfunding change how companies develop their business plans?  If so, in what way?

JH: Since crowdfunding entails large numbers of funding opportunities and “crowdfunders,” some level of business plan standardization is essential for crowdfunders to review many opportunities in a reasonable amount of time.  Our EquityNet platform is unique in that it combines business plan standardization, patented analytics, and business benchmarking to achieve a very efficient experience for crowdfunders and hence, higher funding success rate for entrepreneurs.

Does crowdfunding have the potential to deliver capital, mentoring, and resources to virtually anywhere in the U.S?  

JH: Yes, anywhere that an Internet connection exists has the potential to benefit from crowdfunding.

Any advice for a company that is ready to develop a new product and wants to know what the next steps might be to explore crowdfunding as a funding option?

JH: Yes, visit and explore your funding options at leading crowdfunding platforms such as,, and

(Note:  the information contained in this article should not be interpreted as advice or as an endorsement of any product or service, and cannot be used by the reader for promoting, marketing, or recommending any matter or actions addressed in this article to other parties.)

Judd Hollas is founder and CEO of EquityNet, the original and only patented equity crowdfunding platform. It is used by thousands of entrepreneurs, investors, government entities, business incubators, and other members of the entrepreneurial community to plan, analyze, and capitalize privately-held businesses. EquityNet features over 12,000 individual investors who have already provided $104 million in equity capital to entrepreneurs across North America.     EquityNet, LLC, 866.542.3638

About Author

Doug Devereaux

Doug Devereaux is a Senior Industrial Specialist at MEP, where he focuses on the capture and dissemination of financial resources and strategies that can be used by MEP centers to help manufacturers develop innovative products or expand markets and sales. Over his 25 years experience at the state and federal Departments of Commerce, Doug has led industrial missions to the Pacific Rim and produced various publications involving such topics as laboratory technology transfer, business incubator practices, science and engineering trends in Asia, and community approaches to angel capital investment.

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