Crowdfunding is a rapidly growing market trend for funding projects and startups.
- In North America alone, crowdfunding platforms raised more than $2B in 2012, $5B in 2013, and $9.6B in 2014.
- According to industry research by Crowdsourcing.org and the World Bank, crowdfunding generated $16 billion in funding transactions in 2014, and is on pace for $65 billion globally in 2015 and will surpass $300 billion in funding transactions by 2025.
There are several types of crowdfunding, and the type of business or project an entrepreneur takes on will determine how useful crowdfunding will be and what type of crowdfunding matches with the goals of that company.
Reward & Donation Crowdfunding such as Indiegogo, RocketHub, Crowdfunder.com, Crowdrise.com, GoFundMe.com, and Kickstarter. This form is unregulated, and you can ask for as much as you want. The backers do not get any ownership in your business, but may get some time of predefined reward. Mark Cuban said, Reward Crowdfunding is an ideal testing ground for new projects and products prior to larger equity investors getting involved.
Debt Crowdfunding such as Lending Club, Prosper and Zopaare loan funds by a group of many small investors to an individual. Investors choose to provide funding for specific loans based on their risk and return, either independently, within investment groups, or algorithmically. Then a matching platform initiates the loan process. The platform will solicit and approve borrowers on a number of different factors. Borrowers are still rated partially on their creditworthiness, as they would be for a normal bank loan, but interest rates are often lower than the typical bank loan. Once the borrowers are approved, graded, and the terms of the loan are set, the platform selects investors who have chosen to invest in this type of loan. As the borrower repays the loan, investors receive monthly interest payments. Small, individual, investors aren’t the only ones involved in this market. Venture capitalists and angel investors are also paying attention and funding businesses that come to these peer-to-peer lending platforms.
Equity Crowdfunding such as AngelList, CircleUp, as well as Reg D 506(c) Private Placements and Reg A+ Mini IPO Offering such as SeedInvest.
Crowdfunding B2B Marketplace Market Map B2B Leaders:
Globally the number of platforms continues to double every year.
| Firm | Focus | Stats |
| NYC HQ | North America SMB short term loans (small business loans and lines of credit) | Since 2007, $180m raised, and over $2B deployed to 30,000 SMBs across 700 industry verticals. |
| San Francisco HQ | North America Startup funding for cosnumer product companies | Since 2011, $47m raised, and 60 startups funded |
| Palo Alto HQ | North America SMB financing against receivables | $24m raised |
| Atlanta HQ | North American and Asia SMB working capital loans | $465M raised, and $550 deployed to SMBs |
| NYC HQ | Funding Platform that does Seed, Early Stage Venture, and Equity Crowdfunding Investments | $50m deployed via 44 investments in 41 companies in North America with 11,922 accredited investors |
| Fundly is an online fundraising platform that empowers people to make a difference worldwide. | Since 2010, more than 50,000 campaigns have successfully raised over $325 million on the site. | |
| Fayetteville HQ | equity, debt, and royalty-based capital for entrepreneurs | Since 2005, has 100,000 members, deployed more than $300m. |
| San Francisco HQ | a community of start-ups and investors who make fundraising efficient | Since 2010, $24M raised, 16 investments ranging from thousands to millions. |
| Fundable | Startup business crowdfunding platform | Since 2012, $50m raised and $190 deployed |
| Austin, TX | Funding Platform that does Seed Investments via an online equity crowdfunding platform enabling angel investors to connect with startups to raise capital. | $70m raised with more than 110 investments with 11 exits, 5 IPOs and 28,000 investor members |
[1] Launched in 2007, New York-based alternative lending company OnDeck has raised more than $180 million from Tiger Management, RRE Ventures, SAP Ventures, Google Ventures, First Round Capital, Industry Ventures, and Peter Theil. OnDeck offers short-term loans to small businesses that otherwise may not qualify, making the decision within minutes and the fund within a day.
[2] San Francisco-based online investment platform CircleUp has raised $14 million in a Series B round led by Canaan Partners with participation from Google Ventures, Union Square Ventures, Maveron, and Rose Park Advisors. CircleUp leverages the new crowdfunding rules that allow private companies to raise money from multiple investors on the internet, and has already seen over 60 startups raise money using its platform. Founded in 2011, CircleUp has raised $23 million to date and will use the new funds to improve its data and transparency tools for investors.
[3] Palo Alto-based small business financing startup BlueVine has raised $4 million in new funding led by Lightspeed Venture Partners, Greylock IL, Correlation Ventures, Kreos Capital, and Kima Ventures. BlueVine helps small businesses manage and accelerate invoice payment to access funding more quickly and avoid taking loans. Founded in 2013, BlueVine has just launched its beta service, which it will offer to target audiences next month.
[4] Founded in 2009, Atlanta-based online lending platform Kabbage has raised $106 million by SoftBank Capital, TCW, Lumia Capital, Thomvest Ventures, BlueRun Ventures, and Mohr Davidow Ventures. Kabbage provides working capital to small businesses that are unable to obtain credit from traditional sources, leveraging data to understand performance and deliver financing options.
[5] Founded 2011, NYC based, SeedInvest is an equity crowdfunding platform that connects investors with startups. -
[6] Founded in 20110 in Palo Alto California Fundly is a social fundraising platform for fundraisers of all sizes. Since 2010, more than 50,000 campaigns have successfully raised over $325 million on the site. Works with some of the smallest and largest charities worldwide. See more at: https://www.crunchbase.com/organization/fundly#sthash.Ou64G6BG.dpuf
[7] Founded in 2009, built a platform that gives both accredited and non-accredited investors access to invest in startups. Over $50 million has been raised on our platform to date. MicroVentures is one of the financial industry's first organizations which merges crowdfunding with the venture capital industry. The San Francisco, CA and Austin, TX based firm provides an opportunity for angel investors to invest in startups alongside Venture Capitalists, often at the same terms. We conduct detailed due diligence on startups and if approved we help them raise capital from angel investors. See more at: https://microventures.com/about#sthash.Z3pq2rOe.dpuf