Getting Nerdy with Crowdfunding Numbers
In early May, crowdsourcing research site Massolution.com came out with it’s Crowdfunding Industry Report for 2012. I decided to read the whole (abridged) version of the report and thought I’d report the most useful lessons for those seeking crowdfunding or those who are active in crowdfunding today. Let’s first look at donation or reward-based crowdfunding, then at equity or debt crowdfunding, and then at the big numbers that Massolution is predicting for crowdfunding in 2013.
The Report has a lot of useful information for people looking to attract funding for their projects with rewards or donations-based crowdfunding sites like pleasefund.us. First of all, based on the 1,800 projects proposed in 2011, people looking to get others to donate to their projects based on an appeal to shared values can rationally use $5,000 raised as a benchmark for their crowdfunding campaigns. That was the average across all the projects on crowdfunding sites that operate like this in 2011. However, this number might grow next year OR it we might see more projects funded or both, because the total amount of funds raised on sites like pleasefund.us grew by 63% in 2011. Also, if you’re trying to get funding for your project with donations or through reward schemes, don’t give up hope early! The research suggests that it will take almost 3 weeks to get to 25% of your funding goal on average and about 10 weeks to finish the whole campaign. So, you’ll need to be active for well over two months while your campaign is live. The takeaways: set something around $5,000 as your measure of “success” (but obviously, shoot for the stars) and be ready to campaign for about 10 weeks if your campaign is based on donations or rewards.
Next, it looks like campaigns that offer investors equity in projects are set to continue to change the way business is done. Looking at the projects from 2011 again, the most successful campaigns on websites that allow investors to have a stake in the project were for digital goods like software, film and music. Also, if you have a campaign that falls in to this genre, it is possible to raise a lot of money.
Of the campaigns that actually did get funded, more than 80% of them were able to raise above $25,000 and about 21% of them were able to raise over $250,000. That is pretty incredible. Also, this kind of crowdfunding is growing very quickly - mostly in Europe. The Report reckons that there was a 300% increase in the amount of funding campaigns that offered equity to investors received in 2011. I expect that once the United States allows this kind of investing starting in 2013, we will see the amount of funding these kind of campaigns can attract skyrocket. Also, expect to be very active in the campaign for at least two months. It looks like, on average, equity-based campaigns take about two months to reach their goal. The takeaways: if your product and your community is fairly “digital,” your campaign is an especially good candidate for equity crowdfunding and you can expect to be at it for at least 2 months!
Finally, the crowdfunding industry as a whole is set to keep on growing fast. One of the most impressive numbers in the report is the amount of funding research suggests will be available for crowdfunding campaigns worldwide in 2012: $3 billion. This represents a 200% growth rate or doubling of the amount of crowdfunding activity in just one year. Unfortunately, in 2011 of the 1,800+ projects that were proposed on crowdfunding sites, 99.9% of them were in North America. Let’s get with it rest of the world! Put your campaigns up and activate your audience!
If you’re interested in crowdfunding, keep up with me on LinkedIn.
About the author:
Guest blog from Davis Jones, Director of Operations at Lion Crowdfunding