2012, the year of crowdfunding is over; long live the year of crowdfunding. The platform, clearly, has come of age.
At this year’s 6th Annual TechCrunch Crunchies Awards – the self-described Oscars of the start-up and tech world – both Kickstarter and IndieGoGo are up for “Biggest Social Impact for 2012” award. According to Deloitte Canada’s annual Technology Media and Telecommunications team (TMT) predictions list for 2013, crowdfunding will continue to be one of the hottest trends. In 2012 Kickstarter saw 2,241,475 people pledging $319,786,629 to fund 18,109 projects.
While it is no surprise that crowdfunding will probably be extremely popular this year, the degree to which the platform’s volume expands is worth noting. Deloitte expects crowdfunding platforms to double their pledges this year, raising $3 billion, over the $1.5 billion they collectively raised in 2011.
“Our view is that [crowdfunding is] still in its early days and we don’t seem to have hit any sort of cap,” Duncan Stewart, the director of research for Deloitte Canada told The Financial Post. ”It seems to be continuing to grow.”
In a sluggish economy, crowdfunding is having an energizing effect, spreading optimism. Hundreds, often thousands, of small investors make a successful crowdfunding campaign. Small investors, through crowdfunding, are complimenting traditional venture capital, stimulating economies, and raising funds for everything from new technological devices that make the world better and create employment, to funding art, publishing ventures, creating apps, and new computer games.
Crowdfunding, on the business side, has also made more capital available to a new generation of entrepreneurs. According to last year’s Crowdfunding Industry Report, 36.14 percent of would-be entrepreneurs look to raise money for the first time, with 18.75 percent looking to launch a company for the first time. As crowdfunding matures as a technological platform, it is significantly changing the way people invest.
“Further it could enable VCs to skip the riskier and more laborious early stage investing that many would rather avoid,” David Halsead, the lead technology partner of Deloitte Cambridge told the UK based Business Weekly. “Crowdfunding also brings the potential for more democratic or broader access to capital for startups and innovators without personal connections to capital.”
You can expect 2013 to be the tipping point in which Kickstarter widens its lead and the other platforms continue down the road of appropriating their specific niches. Ryan Caldbeck, a career private equity investor, wrote in Forbes: “While Kickstarter can be successful as the Amazon.com of crowdfunding, other donation sites will need to differentiate and own a particular niche to stay relevant, similar to what happened in the social media, flash sale site and countless other web industries.”
IndieGoGo already occupies the ultra-democratic end of the crowdfunding spectrum.
“What makes Indiegogo really different is the fact that we are the only platform that is completely open,” co-founder Danae Ringelmann told The Denver Post. “We didn’t believe it was our right to determine who should raise money or not, and that the factors of success should be in the hands of the campaign owners themselves. We don’t curate, we don’t have applications, we don’t reject anybody. That’s really important.”
IndieGogo is also focusing on international crowdfunding, accepting funds in four currencies from over 200 countries. Expect this trend to continue over the next year. Over 90% of the counties in the world – 177 to be precise – backed a crowdfunding project.
Indiegogo is also going the cool, or “indie” route, making its presence felt at creative events like Sundance. It will be interesting as the year progresses to see what other niches the other, smaller crowdfunding platforms inhabit.
And so 2013 begins with optimism. It is hard not to be optimistic about crowdfunding after last year, which was phenomenal.
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