Growing Pains as Global Crowdfunding Comes of Age

crowd-imageIt’s growing up fast. As crowdfunding hits what I suppose you might call it’s second official birthday on 5th April – Global Crowdfunding Day (#GlobalCFDay) – it may have a dose of the “terrible twos.” It’s certainly disruptive enough. It’s not toddling but racing away. Now it’s “into everything,” despite cynicism in some quarters and some major barriers being placed in its path.

Indiegogo has grown by 1,000% since the concept of equity crowdfunding was introduced in the US in 2011, demonstrating the viability and success of the model we created. We’re very pleased the government leaders in the US, UK and other places moving forward with making possible the expansion of our vision to democratize fundraising by allowing anyone, anywhere to participate in starting new businesses and creating new jobs.
Liz Wald, Head of International, Indiegogo

Last month early-starter Kickstarter passed a billion dollars funded in a blaze of publicity, a huge milestone for any business let alone a crowdfunding platform. Indiegogo, who started yet earlier, are not far behind and continue to expand across the globe providing an open-door for entrepreneurs and communities everywhere.
‘We’ve raised £1.4million for projects to date and we grew by a factor of 15 times in the last year. Last week we saw our biggest week of funding ever. So we are seeing evidence that crowdfunding is entering the mainstream. People now see it as a valid way to turn their ideas into reality.
Phil Geraghty, MD of Crowdfunder.co.uk, the biggest UK based crowdfunding network
Crowdcube Updated LogoIn the UK Crowdcube.com passed the £20 million mark ($33 million) with more than 100 businesses successfully funded and Seedrs.com started spreading their net across Europe soon followed by German based Companisto.com
We are very glad that crowdfunding is increasingly recognized as a true alternative to other ways of financing. More and more people – 15,000 as of now – are joining our community and investing in innovative start-ups via Companisto, the investment totaling nearly EUR 5m. The fact that the European Commission, in the evaluation of a crowdfunding consultation, recently talked about unleashing the potential of crowdfunding as a means of financing European start-ups and medium-sized companies illustrates that crowdfunding is a model for the future.”  Joschka Rugo, Companisto
But there are growing pains too and it’s not yet clear whether regulators will allow equity to reach it’s real potential – to be and remain open to all – or whether it will be cut off at the knees, hobbling on to become a somewhat expanded version of traditional small-cap share dealing, online.
Crowdlending (or peer-to-peer lending as some insist it should be called to separate it from the rest of crowdfunding) is set to hit the mainstream with new UK regulation cutting in from 1st April that frees it up and is already attracting attention in the mainstream, not least from the BBC.
gcd-screenshot
Meanwhile crowdfunding is everywhere, being talked about in boardrooms and bathhouses across the world as people figure out the huge potential of this stripling and it’s new DNA. From real estate to banking and genetics thought leaders and corporates (from Warner Brothers to Santander Bank) are strategising about the massive potential of what you might call ‘Hybrids.’ Taking this new DNA, growing and using it in new ways, new combinations to genetically engineer new business models with novel characteristics.
Ignorance is still rife with even those thought to be financial thought leaders in earlier times struggling to open their minds sufficiently to understand or embrace these new possibilities, and the majority of journalists, let alone Joe Public, have yet to get to grips with what this might mean for them – let alone society as a whole.
Research is at an early stage too with benchmarks and insights thin on the ground, although that’s changing with Universities and researchers across the globe fast waking up to the need for a deeper understanding and evidence based insights.
But it’s the lack of data has been one of biggest problems in our policy and advocacy work with UK Parliament, which is why we’ve now established the CrowdDataCenter.com to track crowdfunding activity worldwide. The data has already proved invaluable to us creating greater insights and confidence and we will soon open this up to researchers and crowdfunders alike who can all benefit from this major new resource.
Ruth Hedges“April 5th, 2012 marked a monumental day in history and was the day the Jumpstart Our Business Startups Act (JOBS Act) was signed into law. This set a precedent worldwide that will forever change the way jobs are created and capital is raised to stimulate the global economy and help new and existing businesses grow,” stated Ruth Hedges, Founder of Global Crowdfunding Day and one of the pioneers of the bill.”
Ruth Hedges, Founder Global Crowdfunding Day and FundingRoadMap
We will share new insights – including the upwards trends in funds committed in the UK and worldwide month-on month. This averaged £1,700 per hour through January & February for the UK alone and is showing a very significant upswing through March. We now have the full quarters figures including March and will be talking about this as well as new, evidence-based tools for both backers and ventures we are pre-releasing especially for Global Crowdfunding Day on Saturday.
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  • Rob Murray Brown

    By Barry James……….enough said. No mention of the equity crowdfunding failures of course, of the wasted UK taxpayers money, of the lost jobs and unpaid creditors. Good job Barry boy – keep grinning. You are right about one thing – ignorance is still rife.

    Research into Crowdcube’s funded pitches shows that of the 39 that have filed accounts for the period in the pitch, only 2 have got close to their projected incomes. Most have missed them by factors of between 100% and 500%. 4 have gone bust. This doesnt seem to bother Barry as he only makes an income from writing about the amount invested or wasted depending on your standpoint. To date, ~ £1m has been wasted by businesses collapsing and not a single penny has been generated by way of ROI. So that’s £1m versus zero in case you missed the point amidst the PR and positve spin.

  • hempstar

    Hi Rob, would you please name the four companies that went bust?

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