Google and Donald Trump get into CrowdFunding

posted May 8, 2013, 8:44 AM by David Khorram   [ updated May 8, 2013, 7:23 PM by Sallar Khorram ]
There is no question that CrowdFunding will be more relevant to the Crowd in 2013 .  We just learned both Google and Donald Trump are getting to CrowdFunding. Do you know what is CrowdFunding

The Donald is willing to fund anything (literally).

FORTUNE -- Donald Trump is putting his stamp of approval, but not his name, on a new crowdfunding platform that is scheduled to launch tomorrow. He's also an investor in the site, and each week will personally contribute to one or more projects that strike his fancy.

It's called FundAnything, and was the brainchild of The Learning Annex founder Bill Zanker.

"People in tech and some Brooklyn hipsters know about crowdfunding, but it hasn't been brought to the masses yet," Zanker explains. "This is a very big idea -- like eBay or online dating -- and we're just in the beginning stages."

In many ways, FundAnything resembles existing crowdfunding platforms like Kickstarter and Indiegogo. It offers users a way to raise money from other users, and takes a matchmaking commission (5% for fully-funded projects, 9% for projects that don't meet their goal). What's different, however, is that FundAnything neither screens projects nor has any real exclusions. For example, FundAnything projects could include tech inventions, new uniforms for a school sports team, helping out someone with a medical emergency, etc.

The other difference is Trump's involvement. Not only will he personally back new projects each week -- tomorrow he'll unveil the recipients of his first personal investments --  but he'll also promote those choices via his Twitter feed (which currently has 2.2 million followers).

Zanker understands that Trump is a polarizing political figure, but does not believe such sentiments extend to the business world.

"Everyone knows Donald is a genius businessman,"  Zanker says. "We're not talking about politics here. If you want to fund anything, there is no better person in the world to have supporting you than Donald Trump."

As for FundAnything's business model, expect the commissions to be just the start. Zanker says the site is planning live events -- such as how to raise money for real estate ventures -- and that it already has people on the ground to expand into non-U.S. markets. When asked if the site would expand to equity-based crowdfunding once the SEC sets such rules, Zanker was noncommittal. 
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 What Crowdfunding Can Glean from the Successes of P2P Lending

Since 2006, P2P & online lending have enjoyed explosive growth. Lending Cluband Prosper, America’s two largest P2P lenders have now surpassed $2B in loan origination, and P2P has captured the attention of industry legends, the financial media, the investing public and even today’s technology giants.

Lending Club’s board is comprised of such recognized leaders as former Visa Inc. President Hans Morris; the former U.S. Secretary of the Treasury Lawrence H. Summers; Morgan Stanley Chairman Emeritus John Mack and Kleiner Perkins Caufield & Byers general partner Mary Meeker. Prominent venture capitalist firms invested in the sector include: Draper Fisher Jurvetson, Accel Partners, Sequoia Capital, Union Square Ventures, Foundation Capital, Thomvest and Kleiner Perkins Caufield & Buyers.

But the industry reached a new pinnacle last Thursday when Google announced it has led a $125 million deal to buy a stake in Lending Club from existing investors. This transaction values Lending Club at $1.55 billion – nearly tripling the valuation of its last fund-raising round less than a year ago.

Upon the announcement hitting the wires, @lendingclub enjoyed well over 5,000 mentions on Twitter (compared with 5-10 on a typical day), and at its peak averaged 5-7 tweets per minute.

“Google’s investment into Lending Club is further evidence of the current sea change that has begun in financial services. It signals a decisive moment for the validity of P2P lending, the disruption of traditional banking as well as the convergence of finance and information technology. I look forward to hearing Lending Club’s CEO, Renaud Laplanche, discuss the implications of the Google investment at next month’s LendIt conference, the world’s first conference dedicated exclusively to the P2P & online lending industry,” stated Peter Renton, Founder of Lend Academy & author of The Lending Club Story, the definitive guide to the world’s leading peer-to-peer lender.

Although momentous for the consumer credit sector, many have been wondering how P2P’s triumphs relate to securities-based crowdfunding. The fact is, because P2P lending is the precursor to securities-based crowdfunding, its achievements are not only dramatically impacting the emerging crowdfunding industry, they are helping shape it. Securities-based crowdfunding or “Peer-to-Business (P2B)” is simply the next iteration of P2P. However, instead of peers providing personal loans to its peers, securities-based crowdfunding will allow peers to invest in the businesses of its fellow peers in exchange for equity or debt. By demonstrating that people are more efficient at financing each other through the use of social media than with conventional banking intermediaries, P2P has effectively validated the “crowdfinance” model for the entire industry, even compelling the financial establishment to enter the fray.

In just seven years, P2P lending has not only awakened Wall Street and secured funding from many of the same venture capitalists that had the foresight to fund some of the most disruptive industries in history, it has attracted the attention and capital from the world’s most prominent Internet company. While we can all speculate on what interest a search engine would have in social finance, one cannot help but view Google’s assimilation of P2P as a defining moment for the global financial markets. As the next evolution of “fintech” (the union between finance and technology) descends rapidly upon us, traditional banking methods and financing structures are about to become as obsolete as the phone booth.

Much like P2P’s prominence began escalating after the SEC effected the rules for P2P lending in 2008, upon the implementation of title III of the JOBS Act, expect securities-crowdfunding to quickly garner similar enthusiasm from the Street, the venture community, and yes, even tech behemoths. As P2P continues to mark major milestones, it is paving the way for the mainstream adoption of securities-based crowdfunding. As such, P2P’s achievements should be carefully observed as well as celebrated by the entire crowdfunding movement. Securities-based crowdfunding is tomorrow’s P2P.

For an inside look at the incredible growth of P2P & online lending, feel free to join us for a free webinar on May 30th at 1pm EST where industry thought leader, Peter Renton, will  also interpret Google’s recent investments into both Lending Club as well as On Deck Capital. For those investors who have not already signed up for LendIt, please register at For institutional investors who qualify, tickets can be purchased with soft dollars. Please contact attendees@lendit.cofor details.

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