Till now, crowdfunding (or, for sake of exactness- peer-to-peer lending) had caught the attention of small businesses who tap funds from the crowd. But, can the big businesses like Google, Vodafone and Philips also reap benefit out of the crowdfunding boom? Yes. In fact, the multi-billion dollar companies, can access capable start-up firms through the peer-to-peer channel.
In Oct 2012, Indiegogo, Google, and the Entrepreneurship Foundation concluded Gruender-Garage – an online competition for German-speaking Entrepreneurs where the contestants who achieved their business funding targets also obtained an additional funding up to €10,000 each from Google. With this initiative, Google would boost their association with the German start-up and innovation sphere, says Google Germany’s public affairs manager. Liz Wald, head of Indiegogo’s International and business development acknowledges that connecting with the customers through a crowdfunding campaign is far better deal for a brand like Google than directly support the start-ups with funds. Further, Ms. Wald adds that the crowd also sense that they’re helping a creative, social and entrepreneurial cause alongside the brand. Thus, the brand builds a consistent and strong following.
Earlier this year, Vodafone Americas Foundation, in association with Indiegogo, supported mobile technology programs that would leave a social impact. The final three contenders were presented with monetary support apart from what they raised from the Indiegogo campaign. But, not all corporate-crowdfunding associations imply a parallel grant by a multi-national. Take the case of Philips– it considers sharing knowledge to be as significant as sharing hard cash. Philips’ Innovation Fellows competition looked for companies to come up with the “next big thing” in the market. Besides online funding, the winning ideas also become entitled to an additional bounty of at most $60,000. Later on, the Philips would mentor the companies to realize the winning idea. The concept is inspired from the notion of “Open Innovation” i.e. the great ideas can come from anywhere – says Lea Armstrong, a spokeswoman, Philips, North America. The competition aimed more at attracting great ideas than support start-ups.
For multinational firms, sponsoring crowdfunding events is a cost effective way to comprehend the DNA of the start-up. In addition, supporting a start-up company boosts its image. But, there are no indications that the multinational firms will produce a huge return for the larger groups. Some critics believe that companies like Google can do more than providing loans and instead invest in these firms.