Finally, a successful application of crowdsourcing as an alternative to venture capital investing. Trampoline Systems, a UK-based social analytics business is relying on "crowdfunding" for its series B investing -- soliciting smaller investments of a minimum of £10,000 each to collectively total £1 M.
Trampoline has navigated the difficult waters of regulation to enable this creative approach. We've seen crowdsourcing in action for project financing before at Kickstarter, but there backers are donors, rather than investors, without any share in the future value of the projects that they support. Just as with social lending, it is far easier from a legal perspective to make Kiva work (where loans are interest-free donations) than Prosper (where loans are interest-bearing). With Trampoline's model, nearly anyone can become a mini-VC of sort, funding projects at small amounts and sharing in the returns.
The crowdfunding model lends itself to better investment diversification, although investors likely have little to say about how the company is run. Maybe that is for the best from the company's perspective; when funding is distributed across many investors, each investor has less power and in the end, the company may likely have more freedom of action.
Trampoline isn't sharing the details yet of how they are making this work exactly, but lessons learned from this experiment may be invaluable for both startups looking for alternative financing options in a tough VC climate and for smaller time investors looking to get involved in the VC space.