Carl Esposti is CEO of crowdsourcing advisory firm massolution.

If you think that participating in crowdfunding simply means investing in smaller companies that launch games and devices on Kickstarter, think again. With crowdfunding volumes reaching $2.7 billion in 2012, it has emerged as a viable, scalable alternative to public and private finance across the globe.

After surveying more than 350 active crowdfunding platforms, including IndieGoGo, CrowdCube, Symbid, and Gambitious (full site directory at crowdsourcing.org), and completing an in-depth analysis of market trends, research firm Massolution has identified five major crowdfunding developments for 2013 and beyond.

1. Niche platforms

As crowdfunding platforms try to benefit from market differentiation, niche-, industry-, and sector-specific platforms are emerging.

Platforms offering reward-based crowdfunding see an especially high value in serving a common niche or industry. Examples include platforms focusing on video games, recording art, performing art, real estate, food and beverage, fashion, journalism, and more.

While it’s smart for a new platform to choose a specific niche simply to differentiate its service, there is another big reason why this trend is likely to prevail—it helps build a repeated crowd on the platform. Having crowdfunders visit a platform, not just because they have been invited onto a specific campaign, but because the campaigns appeal to their tastes, is extremely valuable.

#2. Locavesting

In her 2011 book, Locavesting, business and finance journalist Amy Cortese describes how “a revolution in local investing” is emerging and that crowfunding is boosting it. This year, we are going to see increased momentum in this revolution because many new crowdfunding platforms will actually specialize in locavesting.

It’s been over a year since President Obama signed the JOBS Act, but legislation is stymied in the hands of the SEC.

However, at least four states – Louisiana, North Carolina, Georgia and Kansas – have taken the initiative to allow crowdfunding for business loans. Crowdfunding platform Rebirth Financial is specializing in locavesting and offers intrastate, lending-based crowdfunding. Although Rebirth’s offerings are open to anyone within state borders, successful campaigns have so far been driven by very local support – all the way down to the customer-base level.

#3. Enterprise crowdfunding

Large enterprises and associations have begun to look into crowdfunding and how this tool carries new potential for their companies, including raising social profiles, market testing, and spin-ins of entrepreneurial ventures. The perceived benefit is not the additional funding itself, but the democratization of specific decisions that would otherwise be made internally in the company.

The American Institute of Architects (AIA) represents the interests of more than 85,000 member architects across the U.S., a sector that has been hit particularly hard by the recent financial crisis. Recently, the AIA published a report examining crowdfunding’s potential as a new source of capital for residential, commercial, and industrial infrastructure projects.

Crowdfunding shows significant promise for attracting investors to smaller projects and getting them off the architect’s drawing board. In this case, crowdfunding will be used to spur community support and financing for an assortment of infrastructure ventures that would ordinarily have difficulty finding money due to their smaller size.

#4. Crowdfunding economic development

Major development banks and similar institutions — including The World Bank and The Inter-American Development Bank — are seeking to leverage crowdfunding for economic development. Crowdfunding’s social profile and its strong connection to micro-finance are the main drivers.

Crowdfunding has historically been embraced by philanthropic ventures, especially for donation-based crowdfunding and interest-free lending. The models naturally merge with micro-finance because the funding needs are very small, and individual donations or loans are likely triggers of funding success. The next step for crowdfunding in this particular space is the evolution and scaling up to economic development at the macro level.

The Multilateral Investment Fund (MIF) of the Inter-American Development Bank is currently exploring the potential of crowdfunding in Latin America, and how crowdfunding can be used to improve small businesses and bring financing to entrepreneurs who have less access to it. In Latin America, crowdfunding is just gathering momentum with about 40 online platforms, including Crowdfunder.mx and Idea.me, established over the last couple of years.

Platforms in the areas of solar energy, education, and urban development are expected to be the most promising in this region.

5. LIVE crowdfunding

The final trend that we see emerging in the crowdfunding space are launch-party events at the initiation of campaigns or LIVE crowdfunding expos. Besides creating media attention and offering a great marketing opportunity, LIVE Crowdfunding taps into an investor need that is hard to come by through the web: exclusivity.

Exclusivity in access to new products or deal flow can be a triggering factor in itself, and LIVE crowdfunding augments online crowdfunding with exactly that.

This October, the CrowdfundingRoadmap is hosting its second Global Crowdfunding Convention and Bootcamp, this year with its first ever LIVE Crowdfunding Expo, where anyone will be able to participate in donations- and rewards-based crowdfunding campaigns right on the spot.

All attendees will need to do is simply walk up to the booth!

In addition, if entrepreneurs are unable to attend the event or are launching their projects after October, CrowdfundingRoadmap is offering them the opportunity to showcase their crowdfunding pitch videos on the big screen at the expo, with a designated QR code, to help them get in front of potential investors and industry influencers.

Crowdfunding represents a breakthrough in how businesses and local projects are funded and disrupts centuries-old financial flows. While 2012 was the year of acceleration for the crowdfunding markets, these new developments above will fuel its growth for years to come.

Image credit: Shutterstock/Hands with dollars

Today, TripAdvisor and Kiva are announcing a partnership that will help with the ‘how.’

Kiva is a non-profit organization that facilities microfinance loans to sustainably fight poverty. The platform connects lenders with borrowers who use the money to create opportunities for themselves. Kiva works with individuals and partner organizations around the world to create a database of borrowers who post profiles with their intended project. This could be anything from giving a Kenyan farmer capital to buy livestock to helping a Phillippino store owner stock her store. Lenders offer a loan as small as $25, receive progress updates, and get paid back as soon as the entrepreneur is able.

As part of the partnership, TripAdvisor will make Kiva loans on behalf of its community. When a traveler submits a TripAdvisor review for a Kiva country, they will be offered the opportunity to select who they want to fund, and TripAdvisor will make a $25 loan. The first phase will fund $250K in loans, at no cost to the traveler.

“There is an overlap between the Kiva spirit and the spirit of what our community does,” said TripAdvisor CMO Barbara Messing. “Travelers to developing countries often feel like they want to do more. They enjoy the hotels and the food but realize folks in that country need more than a smile, they need resources. This partnership says to a traveler ‘hey, you just had a great trip, and here is a real and meaningful way for you to give back.’”

One of Kiva’s core goals is to help people achieve financial independence. The site emphasizes the story behind each entrepreneur to create a lasting connection between borrowers and lenders. This aligns with TripAdvisor’s brand as well, which in its own way, provides a channel for travelers to share their experiences.

“When you see someone and hear their story, it creates empathy,” said Kiva President Premal Shah on a Skype call from Sierra Leone. “Empathy creates generosity, and complete strangers are willing to lend each other money. What fosters and sustains that trust is when the money is repaid and can be loaned again and again. This is why the TripAdvisor partnership makes sense — as global citizens, none of us are visitors. We are connected, and this is never more clear than when we travel. Through this partnership, you can continue the affinity for the places you visit after you leave.”

Shah said the world is shrinking, and mobile technology is spreading to even the most remote corners of the globe. These trends, combined with developments in crowdsourcing and payments technology, have a profound impact on access to capital. Put that together with the 60 million monthly visitors to TripAdvisor, and you get thousands upon thousands of people whose lives will never be the same.

The brains behind Lenddo, co-founders Jeff Stewart and Richard Eldridge and chief scientist Dr. Naveen Agnihotri, think a person’s social graph can be a better indicator of trustworthiness than a credit score. Anyone who’s ever tried to get a loan or credit card without prior credit knows it’s a circular problem, one that is infinitely more difficult in emerging economies. Lenddo helps individuals in these countries break out of the cycle with small loans up to one month’s pay.

The company takes the wealth of data from your many social networks (including Facebook, LinkedIn, Twitter), looks at the people in your Lenddo Trusted Network (family, friends, co-workers), verifies you have a full-time job, and uses predictive algorithms to confirm your identity and calculate if you are a risk. There are three types of algorithms it uses: Bayesian (pattern matching), validators (verifying your identity and the information you’ve given), homophily (you’re likely to associate with people similar to you).

“It turns out, who is willing to endorse you is a powerful indicator of your trustworthiness,” a Lendoo spokesperson told us in an email. “As more people pay back, the network grows, and the borrowing capacity of the community grows.”

Currently, Lenddo only offers loans in the Philippines and Colombia, though it has tens of thousands of members in over 35 countries. The company won’t say how many loans or how much cash it has given out to date, but the average loan is $400 the Philippines and near $800 in Columbia, and the total amount is growing at close to one percent a day. The loans are most frequently used for education, but can also be put towards health care or repairs after a natural disaster, such as the recent devastating floods in the Philippines.

The company plans to use this $8 million round of funding to hire more engineers, ramp up growth, and eventually expand into other emerging markets, a process it says will be driven by its members.

Started in early 2011, Lenddo has employees in Manila, Bogotá, and New York City. Accel Partners, Blumberg Capital, Omidyar Network, iNovia Capital and Metamorphic Ventures participated in this round of funding, as did angel investors Geoff Judge, David Kidder, Scott Heiferman, and Barry Silbert.

With the new green loans, 66-year-old Concepción (pictured), a farmer in Tarma, Peru, got a 12-month $550 loan to buy natural fertilizers. The amount of the loans vary, but individual lenders can contribute from $25 up.

More than 500,000 entrepreneurs have received loans via Kiva, and the company has an impressive repayment rate of 98.71 percent. 81.38 percent of loans are made to female entrepreneurs.

The secret of Kiva’s success seems to be the personal nature of the loans and the fact that individual lenders feel they can make a difference even when contributing small amounts. Kiva works with micro-finance groups worldwide who know their local communities and manage relationships with borrowers.

Last year Kiva received a $5 million grant from impact investment fund the Omidyar Network. The grant will match up to $2 million in loans transacted on the site during 2010 and 2011. The Omidyar Network was started by eBay founder Pierre Omidyar and his wife Pam, and it funds startups and projects that can bring about positive social or environmental change.

Kiva was founded in 2005 and is based in San Francisco.

Omidyar Network, started by eBay founder Pierre Omidyar and his wife Pam, funds startups and projects that could positively impact the developing world, the environment, or the way people connect with one another. Some of its more notable investments include social news aggregator Digg, thin-film solar developer NanoSolar, solar lantern maker D.light Design, and peer-to-peer money lending network Prosper. Given this background, Kiva is a clear fit.

In addition to loans, some of the grant — the largest the nonprofit has ever received — will go toward upgrading Kiva’s operations, namely its technology platform, which allows people to send small amounts of money (usually about $25) online to foster businesses elsewhere in the world. Kiva allows lenders to choose who and what businesses they want to support based on location, biographies of those involved, risk levels, and how much they have already raised.

To make sure loans make it into the right hands, the organization works with a constellation of field partners around the world — smaller micro-finance groups on the ground that work closely with local communities. Some of the money from Omidyar will go toward expanding these partnerships. Money is passed back and forth between all stakeholders via PayPal.

Based in San Francisco, Kiva recently hit its fifth anniversary. It continues to be the most popular nonprofit of its kind. Its Board of Directors already includes LinkedIn co-founder Reid Hoffman and Jenny Shilling Stein of the Draper Richards Foundation. Now Amy Klement, vice president of investments for the Omidyar Network will also join.

Lending Club

Lending Club positions itself as an attractive alternative to the high costs of bank lending. The company brings together investors looking for high returns and borrowers searching for low interest rates.  The process works a lot like a bank loan: Borrowers fill out a loan application and investors can agree to provide funds. The system appears to have benefits for both loan investors, who can see returns of up to 9 percent, and borrowers, who can see interest rates as low as 8 percent, according to the company website.

There are several peer-to-peer lending companies, one of which is also also raising money. Prosper.com, one of the first websites for peer-to-peer lending, recently raised another $1 million for a total raised of $41 million. Another peer-to-peer company, People Capital, is taking a unique angle to the industry and focusing on student loans.

LendingClub has funded over 10,000 loans for a total of more than $103 million, but appears to decline more than it accepts. There are more than 100,000 declined loan requests reaching over $1 billion.

So, what are accepted borrowers using their loans to pay off? According to LendingClub, more than 60 percent use the loans to consolidate debt or pay off credit cards.

The Redwood City, California-based company, founded in 2007, recently secured a second round of funding for $12 million and at the same time period claimed to hold about 79 percent of the peer-to-peer lending market.

The new round was lead by Foundation Capital and joined by existing investors including Morgenthaler Ventures, Norwest Venture Partners and Canaan Partners.

Here’s a chart of LendingClub’s loan issuance: