Established businesses, aspiring entrepreneurs, up-and-coming athletes and even struggling musicians are increasingly creating profiles online and seeking funds from regular individuals to back all sorts of projects.
In countries such as France, the Netherlands and New Zealand, sports fans are contributing money through Sportfunder.com specifically to support athletes in need of cash to pay for training courses, equipment and other costs.
Yomken.com, which is looking to expand throughout the Arab region, links funders to micro-entrepreneurs in Egypt who sell products in the country’s industrial sector.
And music fans from around the world who have visited SellaBand.com, which is based in Germany, have pooled together more than US$4 million to back recording sessions for artists and independent bands who are trying to create new albums.
All told, more than 1.1 million crowdfunding campaigns met their funding goals last year, and a total of 813 platforms already exist or are set to launch, according to data from Massolution, a consultancy.
“As the market begins to reach another level of maturity many of the new portals and pre-launch portals are focusing on specific niches,” says Carl Esposti, the chief executive of Massolution.
“We’re seeing federal departments looking at [crowdfunding] as a potentially interesting vehicle for monetizing government assets and intellectual property, and extending the reach of public sector grant money,” he adds. “We’re also seeing very large financial institutions and international banks looking at it as a possibility at a country or national level to sit next to venture capital and microfinance for small to medium-sized businesses.”
The growth rate of the money generated through online platforms that facilitate this kind of funding has accelerated in recent years, increasing 81 per cent, to $2.7 billion, in 2012 compared with a year earlier, according to Massolution.
This year, the industry is forecasted to generate $5.1bn in funds.
Sites headquartered in the United States, including Kickstarter.com and Indiegogo.com, have driven the market’s growth globally.
According to data from IBISWorld, a market research firm, about 95 per cent of the money that goes toward projects around the world originate from platforms based in the United States.
“North America is still the dominant player and driving the global growth of this market,” says Doug Kelly, a financial services industry analyst for IBISWorld.
Analysts and technology experts expect more individuals and enterprises to turn to crowdfunding platforms with pleas to the public, in part, because banks and other traditional institutions have kept tight caps on how much money they are lending to smaller players.
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