Future of the Crowdfunding Industry

The Crowdfunding Industry Report has been released and it’s got some interesting numbers and some interesting predictions included in it. The information summarized in the report comes from two sources: The Crowdfunding Industry Survey (whose data is from the first quarter of 2012) as well as research from other Crowdsourcing.org sources.

The most humbling number, of course, is the report that crowdfunding platforms collectively raised almost $1.5 billion in 2011. And with the information that Crowdsourcing.org has already amassed, they report that market is set to double in 2012. Which means we’re now talking about a $3 billion industry.

What I also found interesting was how the crowdfunding world was parceled out into four different platforms:

-Equity-based crowdfunding (where funders receive earn something back for their investment)
-Lending-based crowdfunding (lenders expect repayment of donations)
-Reward-based crowdfunding (funders receive other non-monetary benefits for their donation)
-Donation-based crowdfunding (where the motivation is purely philanthropic)

Surprisingly, it’s the reward-based model that currently accounts for the most amount of money in the crowdfunding industry (79%) at the moment (probably due in large part to Kickstarter’s model for success). Lending is currently the category with the smallest share, but that may change with the new crowdfunding bill.

Another highlight of the report concerned the rate at which fundraising takes place. The popular theory is that the first 25% of funds take longer to raise than the last 25%. However, according to crowdsourcing.org, it takes approximately 2.84 weeks to raise the first 25% and then 3.18 weeks to raise the last 25% on average. And the lending-based campaigns take less time than equity or donation campaigns. These figures could be important when considering crowdfunding strategies.

What else do you think will change in the crowdfunding world in the coming year? How do you see the models for crowdfunding engagement changing as a result of its prevalence?

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