At a morning press briefing held at the Crowdfund Global Expo (hosted in San Diego this week), Dr. Richard Swart, UC Berkeley Research Analyst & Director of Research for Innovation in Entrepreneurial and Social Finance at the Coleman Fung Institute for Engineering Leadership, presented a deep dive into the emerging industry of crowdfunding. Many other crowdfunding industry leaders were present at the event as the encouraging data was shared with a broad group of industry participants.
Some of the specific highlights of the briefing include:
- More than 90 percent of businesses raising $5,000 through crowdfunding turn into viable businesses.
- $35 billion in transactions have been cited through Regulation D general solicitation offerings since the SEC lifted the ban on general solicitation
- Within six months of crowdfunding, more than 10 percent of businesses receive institutional bank loans and 28 percent closed funding rounds with venture capitalists and angel investors. – UC-Berkley Analyst Dr. Richard Swart
- More than 95 percent of entrepreneurs who successfully use crowdfunding have some college education. There is about an even split between self-employed and full-time employed founders.
- The average age of people using crowdfunding campaigns is 35 years old.
- Women are more successful at reaching their goals than men, but they generally set lower goals for their projects. However, 84 percent of successful project backers were male, showing that the vast majority were led by males.
- A total of 38.5 percent of entities who successfully raised funds reported yearly revenues of $0-$25,000, 24.5 percent reported $25,000-$100,000, and 32 percent reported over $100,000. For the same group, prior to the campaign, 44 percent of entities did not exist and 31 percent reported yearly revenues of $0-$25,000, 13 percent reported $25,000-$100,000, and 11 percent reported over $100,000.
- The average campaign has 440 backers. The average equity campaign has 96 backers.
- The average equity campaign costs over $1,000 to execute, the average non-equity campaign in the United States costs $3,790. Companies in Europe attempting perks-based crowdfunding spent, on average, less than $500 on their campaign.
- The average firm using crowdfunding had 2.0 employees before crowdfunding, but on average hired 2.2 additional employees subsequent to crowdfunding – this is strong evidence that crowdfunding fuels microenterprise growth. However, about 5 percent of firms hire more than 10 employees, which we assume is evidence for crowdfunding having been market validation – the companies then staff up, crowdfunding was not a mechanism for financing, but of market research and product validation.
- Douglas Ellenoff, Attorney, Ellenoff, Grossman and Schole LLP
- Judd Hollas, CEO, EquityNet
- Audrey Jacobs, VP of Business Development, OurCrowd
- Todd Lippiatt, CEO of Propellr
- David Manshoory, Founder/CEO, Asset Avenue
- DJ Paul, CEO, GATE Global Impact; co-chair, CFIRA
- Brendan Ross, President and Portfolio Manager, Direct Lending Investment LLC
- Ethan Senturia, CEO, Dealstruck
- Chris Tyrrell, CEO, OfferBoard
Crowdfund Global Expo was produced by San Diego based Coastal Shows.