The common denominator between every new creative pursuit is funding. How to get it, how to keep it, and how to realise your vision while adhering to conditions imposed by your investors.
And for some, the sought after money remains elusive and sometimes entrepreneurs and creative professionals are forced to look elsewhere for capital.
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Enter crowdfunding. The alternative funding model has become intensely popular in the past few years, and successful campaigns have run the gamut from major motion pictures to potato salad.
And despite their reputations, platforms like Kickstarter and Indiegogo are not restricted to startups, as many established companies like Pebble and Ubuntu have raised considerable funds this way. Successful campaigns have made their way into the mainstream media and have even received celebrity endorsements.
Global crowdfunding market segmentation by business model in 2015
Source: Technavio, 2015
The global crodfunding market was valued at less than $10 billion in 2010 and has exploded since then. As of 2015, the global crowdfunding market was valued at $33.24 billion, and it is forecast grow by more than $75 billion by 2020.
These projections consider revenue generated through crowdfunding campaigns.
Why crowdfunding will continue climbing through 2020
Early access to capital
Crowdfunding has transformed the common perception that the initial capital to start an enterprise can only be arranged through bank loans, investments from venture capitalists, and accredited investors. It circumvents traditional channels and put the power directly into the hands of consumers.
High marketing potential
An active crowdfunding campaign is a great technique to introduce a venture’s mission and vision to the market. It is cheaper than traditional advertising and can be used to reach multiple channels effectively. Social media is obviously the common platform preferred by crowdfunding campaigns, which makes it less tedious to generate referral traffic to the website and other social media pages.
This benefits companies both by attracting potential investors, but also by generating awareness of a product.
A successful campaign can also act as a proof of demand for investors, which will increase investments. Crowdfunding helps create market validation, and the success of these campaigns also gives credibility to the project and those producing it.
Increased customer base
A successful crowdfunding campaign attracts potential investors in a product’s initial stages. This also gives entrepreneurs the ability to sell a product or concept that has not been released yet, and it is a perfect way to gauge user reaction and to analyse the market conditions. From the consumer side of things, it lets those who are really keen be both a key part of the funding and marketing of a product and also an early adopter.
For more on how crowdsourcing is changing how creative work is funded, view Technavio’s new report.
