It’s not often that we get to write about the only global report on crowdfunding worth talking about. And this one’s doubly special, as we’ve waited for over two years to receive this report by Massolution, the leading market research company who researched over 1,250 different crowdfunding sites. So does this long-awaited global industry report live up to the billing? Well yes, and as expected the results show that the star of the show, crowdfunding, has undergone startling growth globally. Crowdfunding has lifted off at an unprecedented rate, and to celebrate the fact, we’ve picked our top four global trends from this excellent crowdfunding report.
- Massive growth globally
Crowdfunding platforms raised over $16.2bn in 2014. That’s not bad for a ‘cottage’ industry. Massolution is now predicting the global sector to reach $34.4bn in 2015. If we keep this up, how will the industry look in 5 years? Pretty damned mainstream I would imagine. Here’s an interesting revelation; in Asia the amount raised by crowdfunding is now larger than in the EU, largely due to the growth of crowdfunding in China. In Europe crowdfunding volumes grew 141% to $3.26bn. I wrote recently about regulation, or rather the lack of regulation in Europe, holding back this growing industry. In the UK the regulatory bodies have been excellent, and as a consequence trust in crowdfunding has grown, which has aided adoption. The EU (minus the UK) is in danger of being left behind as the globe embraces crowdfunding.
- Market share of top 5 crowdfunding sites is being eaten away
The EU’s top five crowdfunding platforms lost 30% of their market share in 2014. This is not surprising to anyone who works in the industry. If you’ve ever attended an industry event you’ll often be regaled by leading crowdfunding sites. Their PR is mighty, and easily bought into, but the facts speak for themselves.
A fact I always like to remember at this point, which should hearten any new crowdfunding site, is that Google was the 17th entrant into the search engine marketplace. It does not matter how ‘late’ you are to the party… The true crowdfunding game has yet to start.
As investors want more and more niche deals, the crowdfunding market will continue to grow, and new crowdfunding sites will continue to appear and develop. ‘Established sites’ are only established in the sense they have been there early on. With just 3% of the total population being aware of what crowdfunding is, the opportunity for all is vast. Truly.
- The rise of ‘crowdfunding supermarkets’
A trend from the report, which I cannot ignore for obvious reasons, is the massive namecheck and observation that with over 1,000 active crowdfunding sites (over 100 investment based ones in the UK), crowdfunders are overwhelmed with options…
Massolution’s report sees UP as the first investor focused hub, which clearly offers crowdfunding sites a solution to their need to attract a balance of both retail and institutional investment. It is well known that the number one inhibitor to the growth of crowdfunding sites is the uncertainty around the supply of capital – of course deal origination plays a factor too — as UP is the world’s only ‘crowdfunding supermarket.’
- Market consolidation will take place in two ways
Commentators in the marketplace, as well as at fintech conferences, have been suggesting that the market will shift towards consolidation quickly. I agree with Massolution, which suggests that established crowdfunding platforms will seek to expand geographically or within a target category. This is totally inevitable. The report suggests that the launch of UP recently signalled another trend; the rise of consolidation via the creation of super-marketplaces that aggregate deal-flow from multiple partner platforms.
Well that’s this year’s global report. The estimate that by the end of 2015 we should be looking at a global industry worth $34.4bn is pretty exciting. But as my last point, it’s worth noting Massolution’s last estimate was wrong: crowdfunding was in fact around a forth higher than their estimation. And it really boils down to this fact: with crowdfunding no one really knows the full potential. The sky really is the limit. In the words of John Lennon, ‘Power to the people.’