What is the market for crowdfunding?

What is crowdfunding worth?

Will the amount of finance raised through crowdfunding increase?

The US House of Representatives passed a crowd-funding bill allowing startup companies to sell equity by way of social networking and crowd-funding websites. Potential investors will be able to invest only the lesser of 10 percent of their annual income or $10,000. Additionally, the startup entity can raise only $1 million to $2 million.

In the UK equity based crowdfunding has always been possible. Those wishing to invest more than £5K through Crowdcube self-certify as sophisticated investors. The Chancellor has announced that people investing up to £100,000 per annum in a qualifying start-up business will be able to benefit from income tax relief of 50 per cent from April 2012.

According to some estimates crowdfunding initiatives have so far raised about $80 million, If you include Kiva’s $205 million in loans to entrepreneurs in the developing world the total coulkd be $280 million. (see this video of Kiva’s loans).

SETI Stars has raised $228,541 when asking for $200,000.

The Rushmore Group hit the headlines by raising a £1 million on Crowdcube. The Rushmore Group, owner of three members’ clubs in London, today secured its £1 million, in only 4 weeks, from 143 investors to fund the development of a new venue in London.

The previous record was a project on US-based crowdfunding giant Kickstarter, which raised $942,578. Kickstarter has more than 400,000 followers on Twitter and raised $60 million for 10K project in its 2.5-year history. The graph shows increase in Kickstarter’s revenue over 2010.

Though the size of the market is growing fast it is still a minor source of funds compared with other forms of investment. See the slideshare below for a more in-depth analysis.

New platforms are launched across the world each month (see the ever-growing list of UK platforms in the menu bar above) but they are yet to create a sustainable business model. Jonathan Jenkins wrote that there was a fundamental issue of the critical mass needed beyond the immediate social networks of the entrepreneurs. As stated elsewhere in this blog - this is one of the key issues for crowdfunding campaigns - how to reach out beyone friends and family to the wider public and persuade them to invest in their projects.

Comments
One Response to “What is the market for crowdfunding?”
Trackbacks
Check out what others are saying...
  1. […] What is the market for crowdfunding? What is crowdfunding worth? Will the amount of finance raised through crowdfunding increase? The US House of Representatives passed a crowd-funding bill allowing startup companies to sell equit… Source: crowdfunduk.wordpress.com […]



Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 2,980 other followers

%d bloggers like this: