From airline bookings to checking the weather forecast, the Internet has made information more accessible than ever before. It has also made acting on that information a breeze. For example, one can check multiple websites for the best price on a product or service and make a purchase in minutes. Beyond eCommerce, the birth of the Internet has spawned entire industries that boast billions in revenues. One unexpected outcome of the Internet’s rise has been the crowdfunding phenomenon. The Internet allows individuals to discover companies, projects, or movements for which they are passionate and help them become a reality from anywhere in the world with a Wi-Fi connection.
The explosion of the crowdfunding revolution has been nothing short of astonishing. According to Forbes, approximately $880 million was crowdfunded online in 2010. In 2014, that number reached $16 billion and it is estimated that over $34 billion was crowdfunded in 2015. A recent report by Massolution shows that crowdfunding is on pace to account for more funding than venture capital. Many experts believe these trends will not slow anytime soon. “The World Bank estimated that crowdfunding would reach $90 billion by 2020. If the trend of doubling year over year continues, we’ll see $90 billion by 2017.To put that in perspective, venture capital averages roughly $30 billion per year and in 2014 accounted for roughly $45 billion in investment, whereas angel capital averages roughly $20 billion per year invested.”
Who does crowdfunding benefit? Just about everyone. Investors can back a project they believe in and companies can use these investments to turn an idea into a great product or service. The economy also benefits greatly from crowdfunding. One source found that “At the end of 2014, crowdfunding had added 270,000 jobs and injected more than $65 billion into the global economy.”
The potential uses for crowdfunding are boundless. When taking a look at the largest and most successful campaigns, it becomes clear that they are both very different and very similar. The most successful campaigns include video games, an innovative three-wheeled vehicle, a smartwatch, and a product design service. While these products themselves are very different, the campaigns share many similarities. Every successful crowdfunding campaign finds an enthusiastic support base that believes in the product. Perhaps, most importantly, successful crowdfunding campaigns feature a product that is both inventive and buzzworthy.
Equity crowdfunding, specifically Regulation A+, represents an exciting new development in the crowdfunding movement. Rewards-based crowdfunding has been a very popular form of crowdfunding, but has its limitations. Now, through Regulation A+, individuals can actually invest in a promising startup. Forbes believes “If equity crowdfunding doubles every year like the rest of crowdfunding has, then it could reach $36 billion by 2020 and surpass venture capital as the leading source of startup funding.”
The continual growth of crowdfunding has been impressive and the movement shows continued forward-momentum. From local social causes to promising products, crowdfunding has proven to be a game-changer. The most successful crowdfunding campaigns have shown that if you have an innovative idea that is backed by a well-executed plan, individuals will show enthusiastic support. Equity crowdfunding and Regulation A+ have created the potential for the crowdfunding community to show their support in even larger, more significant ways.