Political Fundraising: Out from the Shadows into the Social

by Ricardo Garcia-Amaya & Jesse Sandoval 

January, 2012

Two years ago, the conversation at social gatherings frequented by 40- and 50- somethings included the question "why on earth would you share your life on Facebook?!" Yet only a year later, this same demographic was sharing its latest family vacation pictures on Mr. Zuckerberg's network.

Not too long after, the conversation evolved into "why on earth would you join Twitter when you're not interested in what Lady Gaga had for breakfast?" This year, the same group is tweeting with CNN's Anderson Cooper, the judges of Dancing with the Stars and, of course, tweeting what they had for breakfast.

This example not only reveals the extent to which we are initially resistant to change, but also demonstrates how quickly our society is adopting social networks and unleashing the power of sharing. Social networking has changed our world in its entirety.

Aside from the 800 pound gorillas in the room (Facebook & Twitter), there are plenty of social networks that have brought great positive disruption to a number of very important fields. One of my favorite examples is Angellist.com, founded in 2008, which serves to match startups with investors. Initially, most investors were hesitant to disclose the investment profile of the type of technology startups they were backing.

They were in the "it's none of your business" camp. Today, investors have realized that sharing their portfolio criteria on Angellist can offer greater opportunities to identify and invest in startups than if this information remained concealed. Furthermore, any respectable angel investor or VC today cannot afford to be absent from this platform, since there could be hundreds of lucrative deals they would miss out on.

Political Fundraising: Ripe for a Social Ecosystem

Political Fundraising is a space mired with inefficiencies. First, it's not easy to fundraise as a candidate. Second, as a donor, it's equally cumbersome to make a smart contribution. Additionally, since less than 1% of Americans are active participants in political fundraising, the entire process is a mystery for most citizens.

To get a better sense of things, let's review the current state of American elections. Currently there are 12,000 candidates that run for office every year in the US raising an estimated $2.9B. The majority of candidates does not understand, nor can hardly afford the arsenal of tools available at their disposal. The result is money left on the table.

Nearly all of those 12,000 candidates fail to achieve their full fundraising potential, leaving on the table an estimated $0.60 of every dollar they could have fundraised - a startling figure. Had those been armed with the right and affordable analytical tools, they could have dramatically improved their yields.