The crowdfunding phenomenon – looking beyond the hype

by Marco Testoni and Karen E. Wilson on 14th May 2014

The concept of “crowdfunding” has increasingly drawn attention, most recently for its possible role in providing equity funding to start-ups. While there is a growing hype about crowdfunding, there are also many misperceptions. Crowdfunding initially started for philanthropic projects (in the form of donations) and then spread to consumer products (in the form of pre-funding orders) and lending. However, equity crowdfunding, sometimes called “crowdinvesting” is relatively new and currently comprises the smallest part of the crowdfunding market. Crowdfunding can be defined as the collection of funds – usually made by means of a web platform – from a large pool of backers to fund an initiative. Two fundamental elements underpin the crowdfunding model and are both enabled by the development of the internet: By substantially decreasing the transaction costs, the web makes it possible to collect small sums from a large pool of funders, the “crowd”. The aggregation of many small contributions can result in considerable amounts of capital. The internet makes it possible to directly connect funders with those seeking funding, without the need of an active intermediary.

140514_Crowd1

Crowdfunding platforms assume the role of facilitators of the match however they differ in terms of the activities they perform. Some of them simply provide a portal and automatically post every project, while others screen and make a pre-selection of projects based on a set of criteria. This relatively new financing model is experiencing exponential growth globally. In the period 2009-2013, the compound annual growth rate (CAGR) of the funding volumes was about 76% with an estimated total funding volume of $5.1bn in 2013. In terms of geography, the biggest market has been North America (and mostly the U.S. where the concept of crowdfunding started) with 60% of the market volume, followed by Europe, which has 36%. A) Worldwide funding volumes ($M) | Read more at Bruegel http://www.bruegel.org/nc/blog/detail/article/1330-the-crowdfunding-phenomenon

Read More on

http://www.bruegel.org/nc/blog/detail/article/1330-the-crowdfunding-phenomenon/

 

 

Tags: , , , ,

HEADLINE NEWS

This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news [...]

WJLAHomeFundMe: Crowdfunding for a down payment | WJLAWJLABOISE, Idaho (KBOI) - You've likely heard of GoFundMe, the crowdfunding website, but have you heard of HomeFundMe?It's a website aimed at raising money for the down payment on a home.There is no repayment! This is a t [...]

ForbesHow This Millennial Built A 7-Figure Business Using Equity CrowdfundingForbesWhen he asked them to help fund his company's crowdfunding campaign, they delivered—exceeding his initial goal fourfold and ranking it one of the fastest and most successfully funded companies on R [...]

CTV NewsCrowdfunding site Beam provides job training for homeless 'in a dignified way'CTV NewsHe is among the first to benefit from a high-tech project to use the internet and crowdfunding to help the homeless. The founder is an entrepreneur by the name of Alex Stephany who [...]

Entrepreneur3 Crowdfunding Tips Every Company Forgets From a Brand That Raised $800000 and Got AcquiredEntrepreneurCrowdfunding takes a lot of planning, whether you're gearing up for a launch, a ship date or thinking about the next source of funding you'll pursue. But it [...]

Entrepreneur12 Key Strategies to a Successful Crowdfunding CampaignEntrepreneurI've Raised Close to $2 Million in Crowdfunding Campaigns -- Here Are My Secrets · Next Article. 12 Key Strategies to a Successful Crowdfunding Campaign. Image credit: Shutterstock · Aj Agrawal • Contr [...]

The GuardianWorboys' victims launch crowdfunding appeal against releaseThe GuardianThe women are aiming to raise £10,000 to pay for a judicial review that would initially force the Parole Board to reveal its reasons for releasing the 60-year-old, who has served 10 years in jail. [...]

ForbesVeteran 'Dota 2' Caster TobiWan Launches Crypto Crowdfunding ...ForbesVeteran Dota 2 caster Toby "TobiWan" Dawson, who has casted the final at the biggest esports event ever, is set to launch a new cryptocurrency for a platform that will allow content creator [...]

EntrepreneurLive at CES: Indiegogo CEO Predicts What's Next for CrowdfundingEntrepreneurAt CES, hundreds of companies of varying sizes and stages can attribute crowdfunding platforms to their funding, product design and success. One of those being Indiegogo. Founded in 2007, the [...]

Boing BoingCrowdfunding for medical costs is turning health-care into a reality-TV competitionBoing BoingIt's a sad -- if gripping -- document of the wildly inefficient, friction-hot mess of medical care in the US, where one-fifth of household spending is lavished on healthcare, [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

CrowdFund Beat Media

2018 Fintech World Conference & Workshop, Announcement:Game Changer” Fintech World Media, PR & Marketing Group Proudly Presents: lnkd.in/gqdCrTr

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |