The growth of the internet has led to the emergence of things that might have been inconceivable even some years ago. One of the sectors to have grown at a remarkable pace over the course of the past few years is the Crowdfunding space. In order to understand the industry, it is important for you to first take a closer look at what Crowdfunding actually is.
People may often need to collect money for one cause or another from time to time. It can be for education, healthcare, starting a business venture, or even for a wide variety of charitable causes. Prior to the emergence of the internet or online payment options, such a thing would have been unthinkable.
However, it is now possible for people to set up their own Crowdfunding campaign for a variety of reasons and then seek a small amount of money from people only. There are plenty of Crowdfunding platforms that can be used by individuals to seek funds from people all over the internet.
In this regard, it is possibly important to note the important role that is played by social media in augmenting the campaign. That is another major aspect of any Crowdfunding campaign nowadays. People can amplify their campaign through a range of social media websites in order to get more traction and eventually, more contributions.
At this point in time, the modes of Crowdfunding can be broadly divided into two categories. The first category is known as donation-based funding. In this particular category, the donors pay towards the development of a project of one kind or the other. In this situation, the donor can actually get rewarded in the form of products or services that may be developed as part of the particular project. If the project is for a charitable cause then it is unlikely that the donor is going to get any rewards, however, there might be certain things in store like recognition or rewards.
The second category of Crowdfunding is known as investment Crowdfunding. In this model, businesses may seek investments from people with the promise of handing over a stake, which may either be in the form of debt or equity. This is a model by way of which regular individuals can invest in a business and expect to get returns in case of growth. It is also a fairly popular mode of Crowdfunding and has the potential of turning into a significantly sized market in the years to come.
The Crowdfunding market has grown at a breathtaking rate over the past but it is also important at the same time for you to have a clear idea about the actual market size.
Global Crowdfunding Market
The global Crowdfunding market has clearly grown at a rapid pace in the past few years and in this context, it may be a good idea to take a look at the report published by ResearchandMarkets.Com back in June last year. At that time, the report noted that the Crowdfunding industry could grow into a $196.36 billion industry from 2021 through 2025. That reflected a healthy compound annual growth rate of as much as 15% for the specified period.
The report also pointed out the reasons why the industry is all set to grow at such a remarkable rate within a short span of time. One of the most important points that was made in the report was that the Crowdfunding market is largely fuelled by social media and social media remains free. Hence, the cost of marketing a campaign is zero and that is something that remains a major advantage for the industry.
On the other hand, another report was published by the industry research and advisory group Crowdfund Capital Partners back in December 2021. The firm is involved in keeping track of capital flows under the provisions of the Regulation Crowdfunding.
The report stated that since it had been launched, sums to the tune of more than $1.1 billion had been invested for firms that had been taking advantage of the exemption. It is a clear indication of the fact that the growth in the Crowdfunding industry is on the upward curve. It was part of the JOBS Act of 2012 and it has proven to be a boon for the Crowdfunding industry.
At this point in time, it is an industry that could prove to be significantly interesting for investors who may be looking for new plays and it could be a good idea to keep tracking it.
