Introduction: Macroeconomic Outlook for Crowdfunding

To better prepare the reader for a series of discussions about the macro and microeconomics of the crowdfunding space (relative to Patch of Land's unique offering in the real estate markets), it has become essential that we consider two fundamental shifts in the marketplace. First, that the institutionally driven consumption model is not unassailable; and, second, that alternative models, platforms or instruments can offer considerable benefit, de-risking through collective participation and ultimately derivative value for the investor.

By now, early 2016, most people readily admit that the financial crisis that besieged the world economy in 2007 was abetted by a lack of institutional oversight and transparency. Undoubtedly, the aptly named, "Great Recession" and its aftermath has left a legacy of distrust, fear, and trepidation about the economic future and stability on a global scale. The lack of any oversight or supervision, moral or otherwise, has exposed a massive underbelly of shadow banking, corporate corruption, and malfeasance.

At present, it appears that the EU is attempting to avoid another wave of crises, and some believe that the US economy is teetering on the brink of it is own. Policy makers at COP-21 and WEF have given more than a polite nod to the notion that something must be done to address this lack of confidence and instability. Intensified political cycles and wage inequity (that continues to concentrate most global wealth to a minuscule proportion of the world's population) not only threatens to permanently decimate the middle-class but to unhinge economic chaos.

Wage inequity is just one of many symptoms of a massively imbalanced global economy. The West has become a collection of debtor nations, with much of its burden sitting squarely in the hands of the historically high-saving East. While bankers and traders have sought elusive, irrational yields, global interest rates have been suppressed, markets deregulated. We can say with some assurance that corporate myopia; liquidity hoarding and regulatory malaise stymied both recovery and reform.

These are serious structural, economic problems with which the average person has little knowledge and even less agency to alleviate. Keep in mind that no consumer watchdog agency has successfully stopped banks and investment professionals from expanding their wealth on the backs of the average taxpayer in the last ten years. One after the other, under pressure from their boards and stockholders, strategists underpriced risk and left the cleanup to governments rife with partisanship and overburdened borrowers. Basic movements have come and gone, but no real change has been achieved in terms of opportunity for the lower to middle-income strata of the population here and abroad

More than ever, American capitalism needs consumers who are willing to cooperate fully and smoothly -who do not buck the trend. The "system" by definition requires large numbers of easily influenced people to consume, whose tastes can be standardized and easily fulfilled with a low level of sophistication. As a result of the ever-increasing concentration of capital in the hands of a few people, we fear that the individual is "squeezed out" of the equation by the prevailing social norms dictated by media, consumerism and peer influence.

Economic activism has been relegated to either adhering to the old models or creating minimal changes that can accommodate lower incomes and smaller inflows of consumer capital.

Interestingly enough, at the same time, all of this has blasted open the innovation valve.

Social Trends: Empowerment in the Shared Economy

The work of economic revitalization remains within the sphere of the individual. We can say this is newly situated to include the cultivation of an organic ethos that aspires to guide global humanity and collateralize wealth in a more equitable manner. Crowd-sourcing investment opportunities offer the potential for global, collective participation. Revitalization naturally seeks to conjoin humans' natural and mutual interest, to eliminate the notion of biased or unjust enrichment through crony capitalism, and create a future roadmap for success for actual people, not "corporate citizens".

While many of us are responsible for our own financial imprudence during the crises, responsibility for reestablishing the stability of the system begins with the innovators themselves who are beginning to dethrone usurped capital power of institutions and governments. As such, we attribute some natural intelligence to the markets, as they are comprised of people. That being said, economies can survive overvalued property markets and overly indebted borrowers and all manner of asset bubbles. Today's entrepreneurs and financial leaders must have real strategies not just to weather the losses and maintain the supply of credit, but to go beyond the normative investment and supply/demand consumption models. We must inspire innovation and true, scalable, systemic changes.

Admittedly, bit of pragmatism ought to be introduced to the discussion.

The consumer, on average, is not interested nor inclined to fight the corporate hegemony and oligarchy that upholds fundamental needs creation. Instead, people are beginning to see that this is no longer the only viable model for doing business or for promoting growth and are compelled by alternatives.

Over the same period of time 2007-2016, technology has retooled and "smartened up", introducing us to talking thermostats, installed robots on the manufacturing floor, rewritten labor laws and drone delivery. These developments might seem trite in comparison to the global concentration of wealth, but they are not. Most, if not all, innovation that has revolutionized transportation, energy, logistics, and data has originally come from the smaller entrepreneurial enterprises.

The accelerating pace of digitalization creates open and social co-creation and almost by sheer force, and has revolutionized value creation. The newest focus is on creating data-based platforms that enable stakeholders to partner with companies and third party contributors, to participate in co-creating highly contextualized solutions. Popular examples are Apple's App Store, Google Play, GE, Amazon, Alibaba, Kickstarter, AirBnB, 3M or Ebay.

The primary value proposition of those open platform business models is more customer-centered (whereby ownership, usage and investment are "de-risked" to some degree) where individualized delivery of services and solutions are leveraged access an entire ecosystem. The platform environment is mostly characterized by a tension between collaboration and competition of the participating companies, often referred to as coopetition. IDC predicts that by 2018 more than 50 percent of large enterprises - and more than 80 percent of firms with advanced digital transformation strategies - will create and/or partner with platforms. Platform business models tend to affect and often disrupt, multiple industries over time.

For one, attached ecosystems are mostly cross-industry. For another, the underlying business model logics or deployed digital algorithms can often be transferred from a core industry to an adjacent one. Uber is a prime current example: they are attempting to expand into healthcare and travel.

While platform or marketplace businesses operate as exchanges, they are also building their most valuable asset - data. Their customer list and hopefully their proprietary origination channels are of enormous value. 'Open platform business models,' invite a new level of transparency - a tacit demand made of the marketplace, for and from one particular demographic, Millennials. No matter how difficult it is to be truly transparent (and all businesses have dirty laundry), it's something that the millenarian consumer believes is central to a new economic paradigm. It is not always practical or possible, but it does constitute a viable philosophy of businesses that counters cronyism.

Nearly 20 years ago, the launch of online payments giant PayPal shook the financial services industry. Now, a new generation of financial technology companies is once again breaking down the oversized doors of the conservative banking business. From facilitating loans to wealth management to mobile payments to tax preparation, fintech companies are attacking traditional -- and often inefficient -- practices that shut out as many as two billion consumers (most outside the United States) from the most basic financial services.

In a recent letter to shareholders of JP Morgan Chase, America's largest bank, chief executive Jamie Dimon warned investors that "Silicon Valley is coming." Goldman Sachs, according to Inc., "estimates that upstarts could steal up to $4.7 trillion in annual revenue" from incumbent banks, a potential payday that is driving venture investors to pour nearly $25 billion annually into the sector.

One of the great benefits of virtual financial services firms is that they can efficiently tap a global market of like-minded individuals willing and able to provide financial support to companies and persons who are otherwise shut out of the capital markets because of their small size or non-traditional risk profile. The tools at the consumer/citizen's disposal to rectify these issues are standard issue and will not suffice. Corporate debarment, charter revocation, and civil litigation all require lawyers and paperwork and long drawn out reliance on some of the very forces that are colluding against the individual, so, frankly speaking, they are a waste of time.

There are also significant shifts in demographics related to homeownership. Specifically, the shared economy stimulates new millennial attitudes towards renting versus owning a home and owning things in general. Consider how developers in Manhattan now emphasize amenities over living space. Personalization, engagement and shareability of ideas are all now equal to, if not paramount to simple commercial value.

As noted earlier, consumers are demanding more from the institutions that purport to serve them, but also more from the commercial entities that want their dollars. Just like the irresponsible lending mechanisms that facilitated a great deal of easy capital backfired, companies that do not engage the consumer will not succeed. Aside from the apparent ease with which the consumer has access to a vast number of things to the "app economy", where higher value is placed on social status via social media, and social status via objects; there still exists a large and significant delineation of attitudes around purchase consideration when it comes to investment and homeownership.

Changing Demographics and Crowdfunding Innovation

There is an inherent tendency in analysis to focus on the disrepair of a system, and yet, these are opportune times that demand new financial instruments and arrangements that can help the consumer achieve economic parity and social stability. The urgency of the time we live in accelerates market dynamics, widens and redefines demographics and quickens the pace of disruption across industries. The pervasion of new technologies leads to decreasing the viability of outdated business models. Disruption is no longer verbiage-it's unavoidable. Companies must innovate their business models and revisit structural efficiencies in order to remain competitive.

Research confirms that high-performance culture companies that have successfully pole-vaulted the innovation gap not only understand new opportunities in financial technology but embrace the responsibility to do it differently "this time around". Crowdfunding in particular comprises a new movement, a collective, economic activism that can keep pace with changing consumer trends, address vexing socio-economic problems, and set new standards across multiple industries.