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The origin of crowdfunding is a good one. It was the establishment in May 1933 that allowed citizens to donate money and receive commemorative plates inscribed with “The Reichsbank” for their contribution. Now, more than ever before, people are investing in new projects through online platforms like Kickstarter or Gofundme because it’s easy and convenient – if they raise enough funds, then they can make their project come true!
Crowdfunding is a popular way to raise funds that is only growing in popularity. Crowdfunding may be used by businesses to cover costs connected with a new enterprise or product line, as well as to evaluate interest before investing further money.
While financing isn’t assured, research shows that a solid pitch and consistent communication throughout your campaign may boost your chances of success.
Here are some data to consider if you’re contemplating a crowdfunding campaign for your company.
1. In 2020, equity crowdfunding raised about $239 million.
The quantity of money generated has continuously grown since the Securities and Exchange Commission (SEC) authorized equity crowdfunding to investors of all net worth categories in 2016. In the United States, $239.4 million was raised via equity crowdfunding in 2020, up 77 percent from 2019.
2. Crowdfunding Transaction Value Exceeds $1 Billion Per Year
The United States is the world’s biggest source of crowdfunding, with more than $500 million in equity and reward-based crowdfunding. For the next five years, the worldwide crowdfunding industry is expected to increase at a rate of more than 2% per year, reaching $1.2 billion by 2025.
3. Companies may now use equity crowdfunding to raise up to $5 million every year.
New laws come into effect in March 2021, allowing businesses to raise up to $5 million in equity crowdfunding per year, up from the previous ceiling of $1.07 million. That’s a 194% increase in the amount of money that may be available. According to analysts, this legislative reform would increase the number of investors to 800,000, expand crowdfunding offers by 40%, and help businesses raise $1.2 billion in the first year of the legislation.
4. The Most Popular Crowdfunded Security Is Common Stock
Companies that provide equity crowdfunding may issue a variety of assets, including ordinary and preferred stock, debt offerings, convertible notes, revenue shares, and basic equity agreements (SAFEs). Common stock was the most popular kind of crowdfunded instrument as of December 2020, followed by debt offerings and SAFEs.
5. In terms of dollars and users, WeFunder is the most popular equity crowdfunding platform.
Both investors and companies have access to a variety of equity crowdfunding platforms. Each site has its own set of regulations and limits, as well as distinct audiences and buy-in levels for both crowdfunding investors and those looking for investments. WeFunder topped the pack in terms of money raised in 2020, pulling in $70.9 million in equity investments. Furthermore, among equity crowdfunding sites that track user counts, WeFunder ranks first with one million subscribers.
6. The Food and Beverage Industry Is the Most Popular Equity Crowdfunding Sector
Food and beverage is the most well-funded sector in the world of equity crowdfunding. Restaurants and craft beverage suppliers may get equity or revenue-sharing notes from a variety of sources, including other restaurant owners and private investors.
7. Nearly 20 million people have donated to Kickstarter.
Kickstarter has the most donors among the “big three” incentive and donation-based crowdfunding platforms, with approximately 20 million. The next-largest platform, Indiegogo, has slightly more than 9 million donors, while GoFundMe has 7 million.
8. Regardless of funding source, technology projects raise an average of $1 million in funds.
Since 2014, successful technology companies have averaged over $1 million in cash obtained via equity and reward-based crowdfunding initiatives. The IT industry has received more than $13 billion. The bad news is that just 18% of technology-related crowdfunding campaigns succeed.
9. The average successful technology project on Kickstarter raises about $100,000.
The average pledge for successful technology fundraisers on Kickstarter is $97,911.12. Only 21.4 percent of the almost 48,000 technological initiatives launched on the marketplace were successful. Technology projects had the lowest success percentage of any Kickstarter category.
10. Two-thirds of Kickstarter’s $1 million campaigns are for games and technology.
Games and technology accounted for over 400 of the nearly 600 Kickstarter projects with a target of at least $1 million. With little more than 150 successful projects of $1 million or more, design projects, which include electronics and apparel, came in third.
11. Only around a quarter of all crowdfunding projects reach their financing goal
Over the last decade, there have been millions of efforts on crowdfunding sites. Only 23.3 percent of the programs succeed in meeting their objectives. Comics & graphic novels (57.2%), gaming (52.9%), and charity (52.9%) are the most popular categories (48.4 percent ).
12. The Average Pledge in a Crowdfunding Campaign Is $295
The average crowdfunding commitment is only $295 across all platforms. Kickstarter’s average contribution is $81 while GoFundMe’s average pledge is $66 among donation and reward-based platforms. Regardless of funding source, the typical successful project will have 332 supporters.
13. Women are in charge of 13.47 percent of successful Indiegogo campaigns.
Women-owned enterprises account for just around a fifth of all firms in the United States. The number of women-owned enterprises, on the other hand, is increasing. Women run over half of Indiegogo’s successful campaigns, which is a commendable achievement.
14. Video-based campaigns may raise twice as much money.
Incorporating a video into your crowdfunding campaign may boost your donations by 105 percent on average. Potential contributors can see who you are, what the money means to you and your small company, and how their donations will help you achieve your objective by watching videos. The effect of sharing this personal message through video is greater.
Direct contact through email is also an effective approach to get the word out about your campaign. Personalized emails to prospective donors are one of the most successful methods to collect contributions, with 53 percent of campaign email shares translating to donations.
15. Campaigns That Worked Spend 11 Days Getting Ready
It’s crucial to do your research before commencing a campaign. Successful campaigns will do research and planning before launching, developing a solicitation strategy as well as a marketing effort to promote it. On average, a successful campaign takes 11 days to develop its strategy.
16. A successful campaign pitch is less than 500 words long on average.
Your pitch should be informative enough to provide crucial information while being brief enough to keep the reader’s attention. Successful crowdfunding campaign pitches, according to Fundly, are between 300 and 500 words long.
Conclusion
Crowdfunding may be either equity-based (giving prospective investors a first look at a firm) or reward-based (providing things or rewards to those who buy or pre-order supply). While many crowdfunding campaigns fail to acquire momentum or meet their income goals, you may improve your chances of success by using excellent communication and images, as well as developing a strategy ahead of time.
Frequently Asked Questions
How big is the crowdfunding Industry in 2022?
A: The crowdfunding industry is expected to grow from $6 billion in the fiscal year 2019 to $46.8 billion in 2022, a CAGR of 18.5% over the next five years.
