SMEs should use Australian crowdsourcing hub to reduce need for funding: Expert

Futurist Ross Dawson says Australian SMEs should do more to leverage the country’s development crowdsourcing hub if they want to reduce their need to tap venture capitalists for funding.

Dawson, author and chairman of the international future think tank Future Exchange Network, says the crowdsourcing model – where users go to online to a sort of virtual talent market and ask professionals from around the world to bid for work in areas such as design, web development and administration – is levelling the playing field for small companies.

“The availability of this wealth of talented people to get things done at relatively low costs means there is a reducing gap between the idea and execution,” Dawson says.

He also argues it is cutting the cost of getting a start up off the ground, and in this capital-constrained environment can allow businesses to bypass venture capitalists, who typically provide between $1-5 million to fund early-stage firms.

“People can self-fund and get to a reasonable size by themselves,” Dawson says.

“Companies can get going on money from friends and families or a round of investment from angel investors and get momentum. They can then bypass the VCs in many cases.”

“It’s an extraordinary boon for entrepreneurs and I think that’s part of the message that needs to get out – ideas can be executed so much faster and cheaper.”

Dawson, who has previously bemoaned the relatively slow uptake of social media tools among Australian businesses, says he is encouraged at how quickly this trend has swung around in the last 12 months.

Even more impressive, he says, has been the organic development of a hub of Australian-based crowdsourcing sites, including Melbourne’s 99Designs, DesignCrowd, Ideas While You Sleep and Freelancer.com, which was recently relocated to Sydney.

The challenge now is to get more companies to leverage these crowdsourcing services more effectively.

“One of the relevant roles for Australian businesses in dealing with global clients… is to be able to bring together resources in a way that adds value for them.

“Australian businesses will not be competitive unless we draw on the best available talent for the best available price.”

But Dawson, who will give the opening remarks at a seminar on using crowdsourcing that will be held in Sydney on May 31, admits education will be important part of the process in lifting the profile of the sector, as many SMEs can struggle to use crowdsourcing sites.

“Education and visibility are the keys. People often get burnt, they don’t get the results they want and they do find it difficult.”

For an introduction to crowdsourcing, check out SmartCompany’s article on The power of crowdsourcing.