In Funding Launchpad’s third blog post analyzing Crowdsourcing.org’s Crowdfunding Industry Report, we take an in-depth look at the growth of the crowdfunding industry.
As we touched on in our last blog post, Thinking of Launching a Crowdfunding Platform? Join the Crowd!, the crowdfunding industry’s global revenues are exploding. In 2009, industry revenue was $530 million. Revenue grew to just shy of $1.5 billion in 2011 and is estimated to hit $2.8 billion this year.
If that projection holds, the global crowdfunding industry will have grown 420% in three years, a staggering 74% compounded annual growth rate (CAGR) despite a global recession. Or, quite possibly, crowdfunding’s growth was driven by the recession and its lingering effect of diminished access to bank loans and venture capital.
Breaking down the industry, microloans make up the majority of revenue (38%) followed closely by peer-to-peer lending (36%). (Reference: the four types of crowdfunding.) Both of those segments continue to achieve outstanding growth rates, with 48% and 168% three-year CAGRs, respectively.
The industry’s explosion, however, is driven primarily by equity-based crowdfunding, 17% of the industry with 168% CAGR, and donation-based crowdfunding, just 9% of the industry but a whopping 444% CAGR. If these growth rates continue, crowdfunding would be a $16.6 billion industry by 2015, with donation-based crowdfunding contributing nearly half of industry revenue. The passage of the JOBS Act is likely to influence that segment trend, while possibly driving the overall industry to even faster growth.
From a geography standpoint, in 2009, 55% of crowdfunding funds raised came from Europe. Just two years later, North America contributed 56% of funds. Just 3% of funds came from the entire rest of the world last year. As crowdfunding has the opportunity to democratize capital, we hope to see this percentage even out over time.
Following crowdfunding? We would love to hear from you. What do you think of the industry’s growth? How do you think the JOBS Act will impact these trends?