Emerging Europe: Special focus

Emerging Europe: Special focus

Exploring the banking and capital-market landscape

Middle East: Special focus

Middle East: Special focus

Exploring the challenges and opportunities

Thursday, April 11, 2013

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Crowdfunding expected to raise more than $5 billion in 2013

Lending campaigns have a 90% success rate and donations-based projects 50%, but equity-based platforms have been slow to take off.

Crowdfunding platforms raised some $2.7 billion in 2012 and are expected to raise $5.1 billion this year, according to a report released this week by Massolution.

The crowdsourcing research and advisory firm, alongside www.crowdsourcing.org, surveyed 362 of the 813 crowdfunding platforms in operation.

North America remains the largest market for crowdfunding and is expected to account for $3.6 billion of that raised in 2013, largely led by its dominant lending-based platforms.

Of the $2.6 billion raised last year, $1.6 billion was in North America, $950 million in Europe, $76 million in Oceania and $33 million in Asia. South American and African platforms are emerging.

Donations-based and lending-based platforms are driving growth in the crowdfunding market. Firms such as Lending Club in the US and RateSetter in the UK source the crowd to provide loans. Interestingly, 90% of applications are successful.

Donations-based platforms, where rewards are offered for donations such as Kickstarter and Indiegogo, make up just over half of all funds raised. Pure donations-based campaigns have about a 45% success rate of being funded and are largely dependent on the number of social ties a campaigner has – such as the number of Facebook friends.

Rewards-based campaigns have a 50% chance of being successfully funded.

Equity-based platforms, whereby investments are made in projects and companies in return for a stake, have been slow to take off. In the US, this growth has been hampered by the delay in implementation of the Jobs Act, which allows for equity-based crowdfunding.

Equity-based crowdfunding is not allowed in the US, Canada, Mexico, Spain, Israel and Turkey. It is estimated that equity-platforms raised just $115 million globally last year. Their success in funding, however, is almost as high as donation-based campaigns.

More than one million campaigns were launched last year – almost 70% of which were donations-based campaigns and 25% lending-based campaigns. In Europe, 470,000 campaigns were hosted on platforms. In North America, 620,000 were hosted.

More information on the Massolution report is available on crowdsourcing.org.

Final days of Ricardo Salgado and Banco Espírito Santo

Euromoney Pulse Survey: Renminbi’s internationalization continues apace
When BES collapsed earlier this year, markets briefly feared a return of the crisis to Portugal and to Europe. Even after the bank's bailout, investigators still pore over bank documents, transfers and deals, trying to make sense of Salgado’s last days battling to keep his empire afloat. The backstory is of an extraordinary decades-long rivalry between the country's two pre-eminent business families.