December 3rd, 2018 | By: The Startups Team | Tags: Funding
Crowdfunding is a method of raising capital through the collective effort of friends, family, customers, and individual investors. This approach taps into the collective efforts of a large pool of individuals — primarily online via social media and crowdfunding platforms — and leverages their networks for greater reach and exposure.
Crowdfunding is a rapidly growing industry. Below, we explore key statistics including the average raise sizes, the impact marketing has on average raise, and the underlying demographics driving crowdfunding.
What may have seemed like a niche way to raise money at first is now a major force in fundraising. Worldwide, companies and individuals have raised billions via crowdfunding.
There are three main types of crowdfunding: reward, donation, and equity crowdfunding.
Reward crowdfunding is when people offer money in exchange for a tiered system of rewards. Even though this method offers backers a reward, it’s still generally considered a subset of donation-based crowdfunding since there is no financial or equity return.
Donation crowdfunding is when people donate money, with no expectation of reward or equity. Broadly speaking, it’s correct to think of any crowdfunding campaign in which there is no financial return to the investors or contributors as donation-based crowdfunding.
And equity crowdfunding allows contributors to become part-owners of a company by trading capital for equity shares. As equity owners, contributors receive a financial return on their investment and ultimately receive a share of the profits in the form of a dividend or distribution.
Crowdfunding is a global phenomenon. Each global region has its own trends in crowdfunding. Here’s how much has been raised per region, from highest to lowest amount.
Fundraisers can learn a lot from successful crowdfunding campaigns! And you might be surprised by some of those things. Here’s a bird’s eye view of a successful crowdfunding campaign.
And of course, it never hurts to look at the actual formatting and breakdown of successful crowdfunding campaigns. Here are the elements that distinguish the failures from the successes.
Urgency works! Shorter campaigns tend to do better, with campaign lengths of 20 to 40 days seeming to be the sweet spot.
Success breeds success: Once a campaign has reached 40%, visitors stay on the campaign page for 31% longer and are 22% more likely to donate.
The bad news: Not every crowdfunding is successful. The good news: Many are! Here’s how many crowdfunding campaigns raise their full amount — and more — by the end of their campaigns.
Different markets bring in different levels of crowdfunding — and there are some clear standouts. Here’s the percentage of the total crowdfunding market top five markets covers, listed from most to least.
A successful crowdfunding campaign depends entirely on the fundraiser’s ability to get the word out. Check out these statistics on the importance of marketing when you’re crowdfunding.
A day-to-day marketing campaign translates to three times the amount raised.
There is a direct correlation between the number of outside links to a crowdfund and the success of the fundraise.
Social Media is a critical factor in crowdfunding success: for every order of magnitude increase in Facebook friends (10, 100, 1000), the probability of success increases drastically (from 9%-, 20%, to 40%).
In mid-2012, the American Dream Composite Index surveyed a sample of the U.S. population to establish demographics for general crowdfunding participants.
Remember, crowdfunding campaigns aren’t (just) a fast track to capital or product validation. A successful crowdfunding campaign is a marketing project, just like any other marketing project your company might undertake. It takes strategy, planning, and, above all, effort to make it a success.