A new series of reports, published this week, reveals that Kickstarter-style rewards crowdfunding is now a global phenomenon providing seed-funding to entrepreneurs across 222 countries and creating an unprecedented ongoing wave of innovation.
The “2016: State of the Crowdfunding Nation” report kicks off a new quarterly series of annual and quarterly reports available from TheCrowdfundingCentre.com on global innovation with a slew of annual and quarterly reports covering 2014 and 2015 as well as ten countries, across 40 different sectors.
While the Technology sector has the highest average pledge and so raises the most, it lags behind Music, Film, Publishing, Art and Design in sixth place overall.
“Rewards Crowdfunding is now the new seed-funding” commented Barry E James, Founder of TheCrowdDataCenter as well as TheCrowdfundingCentre “It’s transforming innovation by transforming the prospects of entrepreneurs across the world, who have been excluded until now. Thus creating an unprecedented ongoing wave of innovation that shows no sign of letting up – quite the reverse. Over the last year it’s settled into a steady rate of growth of around 25%”.
From a high base, created by rapid growth in 2014, rewards Crowdfunding grew over the last year in excess of 25% – 27% as measured by amount raised – with participation (the numbers of pledges) increasing significantly (12%) while the success rate fell by 2% as publicity attracted those less prepared for the process.
Number of Projects launched on major platforms increased slightly (2%) while the numbers of projects (fixed model) exceeding target fell by 9%. 4% fewer ‘Flex’ campaigns raised money. Overall contributions increased by 40% and average pledges by 11% with the average number of backers per project also up 12%.
Total funding is estimated at over $1Billion with more than $820Million from just the two top platforms, Kickstarter ($590m) and Indiegogo ($233M). The worldwide total is estimated to be in excess of $1.6Billion – and could be as high as double that given the known high levels of additional activity in China and other non-English speaking territories. In addition to off-platform funding, such as $100m to Star Citizen alone.
Fixing Seed Funding and Deal-Flow?
The report finds that rewards crowdfunding is “The New Seed Funding” and that it is at least as significant as the larger numbers claimed for equity crowdfunding – set to surpass VC funding in 2016 (which itself is estimated to provide about $30Bn annually). The report point out that viewed as seed-funding rewards is 10x more valuable to entrepreneurship and the economy than the equivalent amount in angel and VC funding because the funding ask of angels and VCs is two or three orders of magnitude (ie 10 to 100 times) more than at seed stage. This is “not unlike addressing the ‘First Time Buyer’ problem in the housing market” it says.
“What this new data is telling us is that rewards crowdfunding’s growth is sustained and at a high enough level to be making a significant impact on the mainstream economy, especially entrepreneurship and innovation. Seed-funding has always been an important but difficult, and so under-served, market. Feeding as it does ‘upstream’ investment. The structural difficulties, exacerbated by the financial and banking crisis, have become worse but it looks very much as if rewards crowdfunding is now providing a real alternative” commented Dr Richard Swart of UC Berkeley
” This represents serious capital injected into an economy that will have a lasting impact” commented Sherwood Neiss, Partner, Crowdfund Capital Advisors & one of the architects of the USA’s JOBS act.
The “State of the Crowdfunding Nation” report is released Tuesday and information is available at TheCrowdfundingCentre.com/report.
NOTES and ADDITIONAL QUOTES
“The media often presents a picture of crowdfunding as the domain of big tech blockbusters, but this report blows the lid off this kind of siloed thinking. The data makes it clear that crowdfunding is providing seed and growth funding across a wide reach of industries and geographies, and shows no signs of relenting. And points clearly toward crowdfunding as the new must have skill for emerging entrepreneurs.” Kathleen Minogue, Founder of LA based consultancy, Crowdfund Better
“I’m excited to see the Crowdfunding Centre taking a leadership role in the market to gather, analyze and share important information about the international crowdfunding phenomenon. Developing a data model to understand the market trends and drivers is a crucial step in the maturation of the industry. This initiative goes above and beyond with its global coverage.”
Daryl Hatton, Founder of FundRazr.com and Sponsifi.com
“Given the fact that I monitor the industry so closely I must say there were still several surprises for me here. This work is vital if users are to maximize their efforts.”
Rose Spinelli, Founder, The Crowdfundamentals
“It is exciting to see the huge progress crowdfunding has made in just a few short years. Some day it will be in our DNA and a natural process to look for and fund the projects, businesses and causes that we care about and to use crowdfunding to help expand the best of our humanity.”
Ruth E Hedges Exec Producer of the 5th Annual Global Crowdfunding Convention
“Countries seriously interested in promoting entrepreneurship, innovation and jobs need to be looking at this data to see where they can develop core competencies and compliment them with crowdfunding. This represents serious capital injected into an economy that will have a lasting impact” commented Sherwood Neiss, Partner, Crowdfund Capital Advisors & one of the architects of the USA’s JOBS act.
Seed funding has always proved difficult for both equity and, increasingly as we’ve moved to a knowledge economy, debt, leaving a gap at the start of the entrepreneurial funding ladder. Fixing seed funding should therefore have a disproportionately larger effect, $ for $, than either VC or angel investments.
Meanwhile The ‘most backed’ campaign was the “Exploding Kittens” game which raised $8.8Million, 87,826% of it’s target from more than 219,000 backers. The most funded was ‘Pebble Time’ with $20Million and 4,000% of target – a second run out for the Pebble team. This does not include the Star Citizen game which alone has raised $100Million, mostly via its own website, so not on a major platform and therefore not covered in these estimates.
“It’s difficult to think of a sector of the economy that remains unaffected” commented James “it’s early days in some but even some litigation and legal services are now being funded from the crowd”.
The Crowd Data Center, which contains the data on which the reports are based, also provides facilities for businesses to download in-depth, sector specific, reports providing deeper insights into an industry or sector. “Subscribers can download their own custom report on their industry, or even a niche such as say 3-D Printing or a particular games genre. This provides stats and insights to reveal the emerging landscape through this new lens” explained Director Kay Worton. “We can also arrange for an analyst to guide a business or entrepreneur through the data, provide additional analysis and deeper insights or work on an individual innovation and crowd-asset strategy”.
With change come both challenges and new opportunities. To judge by the depth and range of the activity documented by the report there should be no shortage of either in the years to come.
Other Notes to Editors:
The Crowdfunding Centre provides crowdfund promotion and real time big-data-driven tools & insights for crowdfunders, backers, platforms, investors & analysts including daily and weekly charts & news.
The Crowd Data Center was launched in 2013 and tracks Crowdfunds across the world, compiling data on over 300000 Crowdfunds so far – mostly startups and a smaller number of fast growing businesses. This includes 14,000 ventures currently live and funding – each estimated to be around half of the global total. It is a Department of The Crowdfunding Centre focussed on big data and the crowd.
For information about The Crowd Data Center, The Crowdfunding Centre or for access to the data, please contact Barry James – [email protected] / 07530 438932 or the press office – [email protected] / 0844 8844943