Can the Crowdfunding boom continue or is the bubble about to burst?

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Times have changed a lot over recent years; we no longer have to rely on the mood and generosity of our local bank manager for some much-needed money to establish an exciting new venture or develop creative ideas as, rather brilliantly, we now have Crowdfunding to rely on….. or do we?

Although the concept of using many sources of funding from a crowd to accomplish a goal has been around for centuries it is only recently, with the advent of new technology and ideologies, that the term Crowdfunding has been used and can be traced back to 2006 when Michael Sullivan, the creator of an early Crowdfunding website fundavlog, used it to describe their funding scheme.  It wasn’t until innovative Crowdfunding websites Indiegogo and Kickstarter were established in 2008 and 2009 respectively that the term was universally recognised.  Since then the Crowdfunding industry has grown exponentially with the emergence of specialised sites helping to raise $2.7 billion in funding in 2012 rising to a staggering $5.1 billion in 2013.  Moreover, it was estimated that in 2012 there were 536 online Crowdfunding platforms helping to achieve more than 1 million successful campaigns worldwide.

The growth is set to continue with Fundable predicting that crowdfunding was set to grow 94% in 2014 adding 270,000 jobs and $65B into the global economy.”>Economic Value Crowdfunding

Fundables projected 2020 growth figures, seen on their info-graphic above, assumes the exponential growth rate remains the same as it has been in the past five years, a high risk assumption that will face many obstacles to keep the bubble from bursting.  Much of this growth is predicted to come from developing nations as seen in The World Banks report, entitled “Crowdfunding’s Potential for the Developing World,”.  They predict that the so called Disparo dollar, which basically means money being earned by expatriates outside of their country of origins being sent home, will be the boom in developing countries that will provide the catalyst for continued and sustained growth in the crowdfunding industry.  Social networks will play a huge part in creating and sustaining the Crowdfunding movement with social media building global networks but, and it’s a big but, it relies heavily on these developing nations adopting the new culture and providing policy and amending regulations to allow new enterprises to flourish unhindered.

So back to today, where are we now?  Well, as Craig Arganoff points out, although the big figures and success stories we see publicised are encouraging the reality is that only 45% of campaigns meet their target and more-often than not they are sub $1,000 with a large social media outreach that allows them to stand out from the ever growing number of campaigns vying for our hard earnt cash. Mr Argonoff continues to offer a particularly apposite view likening the current deluge of Crowdfunding campaigns to that of the App Store with thousands of Apps not being found or used due to the sheer volume available.

Does this mean we are being miss-sold the future in terms of the importance and impact that Crowdfunding will have on our lives and take a step back or should we continue to embrace the innovation and entrepreneurship that has got it to where it is now and help guide the movement as it matures and finds its place in the world?


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