Crowdfunding is Not a $1.5 Billion Dollar Industry

 By David Bratvold.

It’s a $133 Million dollar industry – and I’ll prove it. This is quite a bit different from the reports you may see that claim it’s $1.5 Billion. In March of this year I contacted the top 20crowdfunding companies. I collected the total amount of money each platform raised & compiled it into a crowdfunding market report. The total raised reported directly from the founders of these companies: $133 Million.


You don’t have to simply take my word for it just like you shouldn’t blindly believe the “industry” is worth $1.5 Billion. So on to the proof.


The world’s largest crowdfunding platform is easily Kickstarter. If you ask anyone to explain crowdfunding, they’ll immediately mention Kickstarter. The two are synonymous. They, very publicly, reported raising $99 Million in 2011.


How many other crowdfunding companies can you list? Not many, right? IndieGoGo and RocketHub? Clearly there aren’t that many successful crowdfunding companies. I found 20 that met my minimum requirements for researching. And from the list of 20, the platforms that are not in the top 4, are not seeing very much in funding. Let’s stick with these 20 and extrapolate the market value.


If the clear leader raised only $99 M last year and the other 19 competitors raised exactly the same amount, the market value would be $1.9B ($99M x 20). Here’s where it gets interesting.


Surprising to most, GoFundMe, a site you’ve probably never heard of, is one of the top 3 platforms. Recently, they made their numbers public on TechCrunch, announcing monthly donations of $2 million starting May 2012. Their publicly released infographic indicates they were raising $1M per month starting in Feb 2012. With an educated guess we can conclude they raised less than $1M per month throughout 2011. By measuring their stacks of infographic dollar bills, it appears to be about half. This puts GoFundMe’s addition to the 2011 crowdfunding market around $6 million ($500k x 12months).


These are the only two major platforms with publicly available numbers, so I can’t reveal the individual numbers of any other platform. If I take the largest case scenario and estimate RocketHub and IndieGogo’s 2011 total amount raised to be identical with Kickstarter’s, that would provide $297 million to the market. GoFundMe’s $6 million would bring the total up to $303. Since the amount raised by the remaining 16 players must be less than GoFundMe’s, let’s assume they’re all equal at $6M. This would provide an additional $96M, bringing the grand total up to only $399M. Far short of the $1.5 Billion claimed by “crowdfunding consultants” and the $3.2 Billion claimed by the CEO of a crowdfunding platform.


To provide some weight behind the individual numbers I can’t reveal, let’s look at the statistics that are publicly available: Facebook fans. Kickstarter leads with 396,258. IndieGogo: 53,456. GoFundMe: 12,952. RocketHub: 7,149.


crowdfunding-alexa-comparison-400x220Alexa traffic rank shows a similar result. Kickstarter has the highest traffic, followed by IndieGoGo at about half. GoFundMe has a smaller percentage, followed by RocketHub. Obviously these don’t directly affect market size, but you need traffic to make money.


To round out the debate, let’s focus on the definition. Crowdfunding, a subsegment ofcrowdsourcing, is simply getting a lot of people to do something that used to take one person (or small team) – In this case, give you money. In the past you would get money from a bank, family, investor, etc. I could get more technical, but there’s no need. Crowdsourcing isn’t the same as peer to peer lending, giving a dollar to a man on the corner, accessing an angel network, donating to charity, or even pitching in to the Church tithe box. Lending Club, Kiva, & charities are not considered crowdfunding platforms and the amount they raise can not be lumped into this brand new field. If you did you would have to consider family loans, Virgin Money, Red Cross, & even PayPal (they facilitate money exchange).


Reuters’ Felix Salmon was the first to have the gusto to analyze the $1.5B claim & step upin his clearly articulated response. Liz Gannes, from All Things D, responds with the exact same concerns: There’s no proof backing the $1.5B claim. I applaud these two for standing up. I’ve been begging to for months, but failed to go first.


This isn’t all to say crowdfunding is failing. It’s doing very well. In 2011 crowdfunding transferred $133 million dollars. It’s on pace to transfer $350M in 2012. It’ll hit $1.5B someday – just not this year.



This RSS feed URL is deprecated, please update. New URLs can be found in the footers at [...]

NPRAfter Outcry, Crowdfunding Site Patreon Backs Off Plan To Raise ...NPRThe popular crowdfunding service Patreon has backed off plans to change its payment structure, after widespread, vocal and passionate opposition from creators and their fans. Last week, the site announced it woul [...]

EntrepreneurWhy Some Small Business Owners Are Turning to Crowdfunding to Save Their CompanyEntrepreneurMany owners of beloved local businesses, especially in pricier cities, have been forced to swallow their pride and appeal to their customers in times of crisis -- a process streamli [...]

TechCrunchHow hate speech crowdfunding outfit Hatreon crept back online ...TechCrunchIf you want to make a living creating white supremacist content, you're probably not going to do it via sites like Kickstarter and Patreon, which prohibit hate speech. Fortunately there's Ha [...]

Crowdfunding bid to cut car cover for millennialsThe TimesAn insurance start-up that claims it can reduce premiums for millennials will launch a £15m initial coin offering (ICO) next month in another sign of the growing frenzy over digital currencies. InsurePal will use the funds rais [...]

ForbesCrowdfunding Do's And Dont's From iFundWomen's Karen CahnForbesDuring our conversation, she was transparent in sharing that her first software company, VProud, failed because she “did everything backwards” and spent too much time trying to perfect the product. “Pe [...]

CoinDeskKickstarter ICO? Don't Count On It Says Crowdfunding Leader ...CoinDeskThe company most widely associated with crowdfunding, Brooklyn-based Kickstarter, has no plans to get into the initial coin offering (ICO) business. Coming in response to the news yesterday that compet [...]

TechCrunchFormer Gawker employees are crowdfunding an effort to buy Gawker.comTechCrunchWhile Univision acquired most of Gawker Media's sites last year (and renamed them as the Gizmodo Media Group), the deal didn't include Gawker itself. In fact, BuzzFeed reported last month [...]

Crowdfunding For French CastlesNPRYou too can own a French chateau, in part, anyway. Romain Delaume, CEO of Dartagnans, tells NPR's Scott Simon about a crowdfunding effort underway to preserve La Mothe-Chandeniers. SCOTT SIMON, HOST: What if I told you that for about $60, you cou [...]

CryptoCoinsNewsCrowdfunding Giant Indiegogo Looks to Make ICOs MainstreamCryptoCoinsNewsCrowdfunding platform Indiegogo has a plan to help initial coin offerings (ICOs) break into the mainstream, even as the U.S. Securities and Exchange Commission (SEC) is ramping up its oversight of [...]

CFB Finance


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

Press Release

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 |