Is the Crowdfunding Platforms Space Getting Crowded?

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While the American crowdfunding platforms market has witnessed very rapid growth, other countries are catching up. The players are many and varied. We got Technavio analysts to dissect the current market situation.

Crowdfunding, or crowdsourcing funds via the internet, has been established since over a decade. In fact, one of the first noteworthy campaigns occurred in 1997. It has been used to fund music, video games, concerts, and has become popular for entrepreneurial ventures seeking its first customers. They have also become a source of crowdsourced donation or charity funding. The high number of crowdfunding platforms have been spawned by the rapidly growing number of internet sites offering different kinds of crowdfunding. Technavio analysts expect the global crowdfunding market to hit 17% CAGR by 2021 (source). The following end users were considered to understand this market:

  • Entrepreneurship
  • Social causes
  • Movie and theatre
  • Real estate
  • Music
  • Technology
  • Publishing
Are there too many crowdfunding platforms
Crowdfunding platforms have revolutionized internet finance, but are they still viable?

Entrepreneurship offers rewards funding, as well as equity crowdfunding to those looking to fund startups, with rewards funding helping entrepreneurs get their first customers as those who paid to pre-order their products and/or services, without putting their shares on the market. Especially in the USA, this type of crowdfunding has been very popular. More and more, however, people are trying out other kinds of funding, including testing waters in the equity crowdfunding market by acquiring shares of a startup they opt to fund as smaller scale investors.

As the market shows steady growth, its rate of growth however has slowed down as compared to that of previous years. With a lot of crowdfunding platforms on the market front, does it seem that the market has become too crowded? Research says no. Or at least, not yet. With more and more entrepreneurial ventures being comfortable with crowdsourcing as investment, and crowdfunding no longer being restricted to primarily US-based companies, the future of the equity crowdfunding market seems in no danger.

A channel for the millennial economy?

crowdfunding platformsWith the brave new world fronted by computer-savvy millennials, it would make sense that financial transactions, even relating to their businesses, be as easy as filling an online form. Crowdfunding fits into the economic ecosystem that will fuel the age of online company building. Fortunately for the crowdfunding market, this trend has grown much beyond American territory, and into other leading economies like Japan, China and India.

With the ease and purported security of online transactions, payment does not remain a concern for investors. Crowdfunding industry reports show that the market is driven by their ability to offer customers a way to gauge audience engagement on a real-time, quick basis, paving the way for future projects and allowing a cultivation of trusting financial backing for them. With North America having already shown the way for a burgeoning market, leading Technavio analysts predict that this financing model is in line to overtake the venture capital model.

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The APAC scenario

Crowdfunding outside the USA is not a replica of the model followed in the country. Over the years, the platforms and the market itself has reflected the ups and downs of the economy and the society as a whole. It also poses some amount of threat to traditional financing institutes in some places, although more financial behemoths remain largely unaffected. Moreover, the mindset of it audience has not always been open to lesser established funding options such as crowdfunding. With one of the most popular globally available crowdfunding platforms, Kickstarter, now available in Japan, it might seem like the market has finally been broken through in Asian countries. It might be surprising to learn, however, that it has been the presence of other more local players that may have paved the way for Kickstarter. Kibidango is another Japanese player that now offers crowdfunding in Japan, and online entrepreneurs can have a strategy better suited to Japan with such regional players.

Read our latest market report surrounding the crowdfunding market here.