BackHow will Crowdfunding evolve in the coming years?
According to the world bank analysis the total market potential by 2025 is estimated to be up to US$90-96 billion per year. Let's take a look at the factors that may give boost to the crowdfunding economy in the coming few years:
PremiumThere have always been traditional ways of financing like Angel Investments (or Seed Investments), Venture Capitals, and loans from Financial Institutions especially banks. But crowdfunding is an innovative method of raising funds online for startups or small businesses by a group of individuals who contribute a small amount of money.
One of the contemporary methods of fundraising, crowdfunding has been used to fund a range of initiatives, from small enterprises and movie productions to medical costs and disaster aid. Even though the crowdfunding sector is relatively new, it has already overtaken other fundraising strategies in terms of popularity. This enables business owners to avoid the established banking system and look forward to crowdfunding as a new way of financing.
According to the world bank analysis the total market potential by 2025 is estimated to be up to US$90-96 billion per year. Let's take a look at the factors that may give boost to the crowdfunding economy in the coming few years:
Factors That May Boost Crowdfunding Economy
Investing in Startups
The early focus has been on reward-based platforms like Indiegogo, Kickstarter & GadgetAny. Equity-based crowdfunding is the upcoming major wave, starting this year. Previously, only the rich could afford to own startup shares. Due to these new rules, companies are searching for individuals who are interested in supporting both their vision or dream as well as the firm as investors.
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Crowdfunding offers businesses a distinct (and, for many businesses, superior) option to venture capital or angel investors for obtaining funds. The new investment class, a larger group made up of middle-class Americans, will control the investment and consequently the decision-making power. The worlds of financing, crowdsourcing, and startups have completely changed.
Educating the Investors
There will be a larger requirement for education as a result of these modifications to the investing and crowdfunding rules. To attract the new class of investors' money, crowdfunding platforms, thought leaders, and businesses searching for investments will find it worthwhile to educate them on equity, fundraising, investing, and current trends in crowdfunding. To meet these needs, websites like Shareholder Academy have appeared online.
"In the end, education is key and we look forward to the success of Shareholder Academy to help grow all verticals within crowd finance," Fishfeld said.
Technology in Crowdfunding
It's critical for crowdfunders to reach the appropriate audiences because there are so many projects looking for financing and so many backers looking for projects. In order to better serve the requirements of people posting projects, many platforms are now implementing a data-driven approach into their systems to meet the requirements of those posting projects. Additionally, some websites provide influencer search capabilities to find the well-known early adopters who will introduce campaigns to a wealth of potential backers. Sites like Crowdfunder and StartEngine are specifically designed for equity crowdfunding.
Crowdfunding's expansion and benefits are also being recognized by marketing firms. Nowadays, entire teams and digital marketing firms are dedicated to assisting clients in using crowdfunding efficiently by publicizing their campaign, focusing on donors, and continuing with media coverage after the project has been funded.
"Crowdfunding investments won't replace expertly managed investments funds any time soon," said Daniel Pianko, Managing Partner of University Ventures, which has approximately $300 million under management. "But it will be an exciting part of a new investing dynamic. Going forward, entrepreneurs will have to consider whether going to crowd markets first or instead of private investors and investors will have to figure out what early crowdfunding success means for a potential company. And what's most interesting is when professional investors start leading' funding initiatives rather than raise their own small funds."
Increase in number of niche platforms
As the word crowdfunding comes to mind, Kickstarter & Indiegogo are the two platforms that pop up before us but there are many types of crowdfunding platforms, especially niche platforms. The rise of focused crowdfunding platforms can give a major boost to the crowdfunding ecosystem which may further convert into bigger profits. These niche platforms are going to draw a specific pool of backers and donors.
Kickstarter
Kickstarter is a globally recognized crowdfunding platform. It specializes in creative projects ranging from films, music, stage shows, comics, journalism, video games, board games, technology, publishing, to food-related projects.
Indiegogo
Indiegogo is a crowdfunding platform that allows people to raise funds for creative projects. This includes everything from making art, music, and books to inventing new technologies and starting businesses.
GadgetAny
GadgetAny is a crowdfunding community of more than 100,000 backers. Most startups are using Gadgetany to launch their tech related projects. This platform is specifically designed for tech related projects and works on a reward based model.
Patreon
Patreon is one of the unique crowdfunding sources with a specific focus on the new wave of creators—bloggers, YouTubers, podcasts, cartoonists, musicians, live streamers, and their ilk.
FundRazr
This platform enables people, NGOs, and businesses to raise money online for causes that are important to them. You can choose from all-or-nothing or keep-it-all fundraisers, delaying access to your donations until you've met your funding goal.
The crowdfunding has become a multi-billion dollar economy for filmmakers, artists, nonprofits, individuals and now, startups. However, the face of crowdfunding is going to change with the rise of niches like education, music, gaming, nonprofits and charitable organizations, research, and local projects are making their own platforms to attract backers and grab more eyeballs. Undoubtedly, crowdfunding is going to be the future gateway of investment as it is expanding its horizon in multiple sectors.
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