Product Code: 70122
The crowdfunding market is expected to witness a growth at a CAGR of over 16% during the forecast period (2020-2025). Crowdfunding entails soliciting many small amounts of money from an undefined group of people known as the crowd. Crowdfunding platforms could be intermediaries between donors and beneficiaries. This intermediary could exploit a plethora of marketing techniques to influence the behavior of the potential donor. Therefore it is important to look for the influencing factors that are being used on crowdfunding platforms such as social media platforms for raising funds.
- Moreover, according to Fundly, the global amount raised by crowdfunding amounted in the thirties of USD billion in 2019. Further, it has been estimated that 6,445,080 number of crowdfunding campaigns were hosted globally in 2019. Also, the crowdfunding market is expected to triple by 2025.
- The social media platforms are acting as a free of cost promotion resources for crowdfunding organization to have a global reach to audiences. It has enabled the companies to make their pre-selling and marketing for products at more convenience. Hence, the active crowdfunding campaigns on social media are expected to further drive the crowdfunding market's growth in the coming future. According to startups.com, 12% of the Facebook share, 3% of Twitter shares, and 53% of email shares convert to donations.
- The company operating in the gaming industry are witnessing the most successful fundraising campaign to raise fund. Also, technology campaigns are able to attract crowdfunding. According to the Kickstarter crowdfunding platform, it raised over USD 1 million, where 37% of gaming campaigns have been successful in raising funds and technology campaigns made up of 30% of successful campaigns.
- Many companies, such as Kickstarter PBC, Indiegogo Inc., GoFundMe Inc., Crowdfunder Inc., and Alibaba Group, are offering their platform for crowdfunding to raise funds for various initiatives. In October 2019, the crowdsourcing platform Kickstarter registered over USD 4.5 billion, which has been pledged to different projects.
- With the recent outbreak of COVID-19, the crowdfunding market is witnessing significant growth, especially donation crowdfunding to support and help communities, people, and many organizations fight this pandemic. For instance, in April 2020, Facebook launched "Facebook Fundraiser," a platform where people can raise funds for the charity to help others during a pandemic.
- In April 2020, in India, various crowdfunding platforms raised worth over INR 100 Crore to financially support people in need. These online crowdfunding campaigns help stranded migrants, daily wage laborers, transgender communities, circus artistes, Uber drivers, Swiggy delivery personnel, rural artisans, dancers, and freelance workers during the pandemic.
Key Market Trends
Reward-based Crowdfunding is Expected to Grow Significantly
- Reward-based crowdfunding is where the company (typically a start-up) raise pre-seed and seed capital through an online platform and offers investors a gift or "perk" for their financial contribution. It is considered pre-sales, in which individual or projects, or the companies, raise funding from bankers, who then receive a non-monetary reward. This provides the companies to engage an build on an existing network and solicit than can be leveraged later. This kind of crowdfunding is usually suitable for early-stage companies or a specific project.
- Australia-based start-up - Okra Solar, which has been piloting its "plug-and-play smart controller" to facilitates power-sharing by neighbors. The company has mentioned fo it launched a reward-based crowdfunding campaign to complete the small-scale pilot to prove the technology. With this campaign, the company raised over USD 45,000 in seed capital to build a prototype. Later the campaign won many grants from the United Kingdom's Department of International Development, Swedish International Development Corporation Agency, and secured pre-seed financing through Energy Access Ventures Fund backed by Schneider Electric.
- According to the Global Entrepreneurship Monitor, the start-ups in the United States hold over a significant 17.4% share of the country's total population. This indicates the huge opportunity for the reward-based crowdfunding in the region. Also, with the huge market of crowdfunding in North America, this opportunity further expands.
- The Covid-19 pandemic has led to a surge in the donation and reward-based crowdfunding incidences aimed at supporting the population affected by the worldwide pandemic. There has been a considerable upsurge in the number of Covid-19 reward-based crowdfunding campaigns launched by a wide variety of people (including citizens, business organizations, foundations, charities, and trusts) across the European continent.
Europe Occupy Significant Market Share
- The European crowdfunding market share and growth are expected to proliferate due to an increasing number of countries in the region, organizing regulations for the crowdfunding model. The European Union countries are also reportedly planning to set rules with an aim to enable crowdfunding platforms in the region to operate across other EU regions.
- Additionally, Turkey is one of the countries in Europe experiencing significant growth in the crowdfunding market with the presence of steady employment opportunities. According to the Global Entrepreneurship Monitor Report 2019, this is one of the key factors driving economic growth in the country, improving conditions for entrepreneurship by 10%, raising over USD 331 billion to the economy.
- Hence, the government actively encourages and supports entrepreneurship in the country. According to the Startups Watch 2019, the Turkish government funds have the dominance in market share by the funding volume followed by angel investments and VCs for funding early phase startups in the country.
- The European Investment Bank (EIB) has a venture-debt product which is aimed at SMEs looking for raising over EUR 7.5 to 50 million. With the help of the crowdfunding platform, the bank combined advantages of a long-term loan with a remuneration-model based on the borrower's performance. With this model, the bank targeted companies with over 3,000 employees in the field of biotechnology and life sciences, software and information and communications technology (ICT), engineering and automation, and renewables and clean technology. To date, the bank lent over EUR 750 million in long-term venture debt financing and is expecting to create more than 6,500 jobs and EUR 7 billion in research and development investment.
The market for global crowdfunding is moderately consolidated due to the presence of a few companies dominating the market with the presence of many other companies competing between themselves. Also, these companies are extensively investing in offering a wide range of technologies to the customers for industry-specific end-user applications. Some of the recent developments in the market are:
- In May 2020 - BuildHer, a UK-based crowdfunding platform for women of black origin, officially launched its service. Founded in 2018, BuildHer claims it equips disadvantaged young women in Kenya with accredited construction skills, leading to greater financial prosperity, changing male attitudes, and promoting gender equality within the construction industry.
- In April 2020 - Aescuvest international GmbH, a leading crowdfunding platform powered by EIT Health in their Call4Ideas Campaign, aims to help start-ups and researchers work towards flattening the curve of COVID-19, accelerating their entry to the market.
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TABLE OF CONTENTS
- 1.1 Study Assumptions and Market Definition
- 1.2 Scope of the Study
2 RESEARCH METHODOLOGY
3 EXECUTIVE SUMMARY
4 MARKET INSIGHTS
- 4.1 Market Overview
- 4.2 Industry Value Chain Analysis
- 4.3 Industry Attractiveness - Porter's Five Forces Analysis
- 4.3.1 Threat of New Entrants
- 4.3.2 Bargaining Power of Buyers/Consumers
- 4.3.3 Bargaining Power of Suppliers
- 4.3.4 Threat of Substitute Products
- 4.3.5 Intensity of Competitive Rivalry
- 4.4 Assessment on the Impact of COVID-19 on the market
5 MARKET DYNAMICS
- 5.1 Market Drivers
- 5.1.1 Use of Social Media as a Free of Cost Promotion Source
- 5.1.2 Increasing Investor Forward looking Strategic Behaviour and Social Interactions among Investors
- 5.2 Market Restraints
- 5.2.1 Time Consuming Process and Stringent Regulatory Compliance
6 MARKET SEGMENTATION
- 6.1 By Product Type
- 6.1.1 Reward-based Crowdfunding
- 6.1.2 Equity Crowdfunding
- 6.1.3 Donation and Others
- 6.2 By End-user Application
- 6.2.1 Cultural Sector
- 6.2.2 Technology
- 6.2.3 Product
- 6.2.4 Healthcare
- 6.2.5 Other End-user Applications
- 6.3 Geography
- 6.3.1 North America
- 6.3.2 Europe
- 6.3.3 Asia-pacific
- 6.3.4 Middle East & Africa
- 6.3.5 Latin America
7 COMPETITIVE LANDSCAPE
- 7.1 Company Profiles
- 7.1.1 Kickstarter PBC
- 7.1.2 Indiegogo Inc.
- 7.1.3 GoFundMe Inc.
- 7.1.4 Fundable LLC
- 7.1.5 Crowdcube Limited
- 7.1.6 GoGetFunding
- 7.1.7 Crowdfunder Inc.
- 7.1.8 Alibaba Group Holding Limited
- 7.1.9 Wefunder Inc.
- 7.1.10 Fundly
- 7.1.11 Jingdong Inc.
- 7.1.12 Suning.com Co. Ltd
- 7.1.13 Owners Circle
- 7.1.14 Realcrowd Inc.
8 INVESTMENT ANALYSIS
9 FUTURE OF THE MARKET