By Tim Wright

IN my day-to-day work supporting businesses with digital transformation at XpoNorth, it’s my job to look at trends, spot the next big thing, then help businesses towards implementing innovation and new ideas. While not a new concept, one of the biggest, and often most untapped opportunities is to harness the power of the "crowd" for business growth. Crowdsourcing is transforming the creative and heritage sectors by harnessing collective intelligence, insight and access to funding.

Take crowdfunding for example. In simple terms this means raising money from a group of funders who provide a large number of small contributions towards the total needed for your project. Using online crowdfunding platforms like Kickstarter or Indiegogo can offer businesses access to the crowd quickly and cost effectively.

There are four key models involved: donation, reward, lending and equity.

In donation-based funding there is no expectation of a tangible return for the donor, it’s purely a donation, these are common in charitable and community-based projects, with Just Giving as one of the market leaders.

In the reward-based model, you pre-pay for a product or service (reward) in advance, this could be an album from a band or, using the example of Scottish sunglasses firm Tens, you could pre-purchase something that is yet to be fully produced. The benefit to the business is that they are able to collect the fund prior to producing the product, turning the normal cashflow issues a start-up faces on its head.

With loan or peer-to-peer lending, a business will raise loan funds, usually with interest payable, from a number of smaller investors. This sector is highly regulated by the FCA.

The final type of crowdfunding is equity-based, when a business offers equity in exchange for funds. This model is most popular with more established businesses and more sophisticated investors who are often looking for a return whilst spreading their risk. The Equity for Punks scheme from BrewDog is a well-known example of this.

There are so many other benefits to businesses of embracing the power of the crowd. Crowd-based workers on platforms such as People Per Hour can provide businesses with fast access to a crowd of skilled workers and customer forums on platforms such as Facebook can allow you to engage with your own customer-based crowd to test a new product line, collaborate on a new product range or services roadmap.

Another way creatives and heritage groups are harnessing their "crowd" is by introducing membership schemes. Typically these involve members paying on a regular basis to get access to special content, and platforms like Patreon are proving very popular.

We’re excited by the power of the crowd at XpoNorth. Our conference next week will run a panel session "Working the crowd" hosted by Epi Ludvik, founder and CEO of Crowdsourcing Week, which will include case studies from world-leading crowdsourcing projects and companies and provide valuable lessons on the way to utilise the crowd to create value and solve challenges.

Tim Wright is an author and digital sector specialist at XpoNorth. Catch “Working the Crowd” at XpoNorth on Wednesday 16 June, 3.45pm – 4.45pm