LONDON--(BUSINESS WIRE)--Technavio’s latest report on the global crowdfunding market provides an analysis on the most important trends expected to impact the market outlook through 2020. Technavio defines an emerging trend as a factor that has the potential to significantly impact the market and contribute to its growth or decline.
According to Technavio, crowdfunding is the practice of generating capital investments or funds for a project, cause, or enterprise by acquiring funds from many individuals. This method is adopted when an idea that has the potential to create jobs and generate revenue needs financial support to become a reality.
The top four emerging trends for the global crowdfunding market according to Technavio’s research analyst are:
Dominance of crowdfunding platforms
The report states that more than 300 crowdfunding platforms were present in 2013. This figure increased to 1,300 by the end of 2014 and is forecast to rise significantly during the forecast period. Despite the rapid rise in the total number of websites, market-specific websites such as AppStori for app development, MedStartr for healthcare, and Barnraiser for food and agriculture, are not able to compete with major players such as Kickstarter and Indiegogo. Kickstarter has more than 4,000 active campaigns, while AppStori had three, MedStartr had eight, and Barnraiser had 20 as of October 2015.
“Non-specific websites such as Indiegogo have the largest global reach, with better abilities to amplify a product or concept in comparison to smaller market-specific platforms. Also, with the increasing number of M&A, smaller platforms will be better equipped to compete in the market,” says Technavio’s new research areas lead Soumya Mutsuddi.
Growing popularity of equity investments
Equity investments allow investors to have an equity share in the company. Many websites such as AngelList, CircleUp, Crowdfunder, and Fundable facilitate such transactions by connecting investors with entrepreneurs to fund the company in exchange for shares in their startups. Equity investments accounted for over 7% of the overall crowdfunding market in 2015 and is expected to exceed 15% by 2020.
Hiring professional campaign managers for crowdfunding
Technavio highlights the fast-trending factor where many startups are hiring professional campaign managers to run their crowdfunding campaigns. This trend is observed across all crowdfunding platforms with positive results. As a result, the average funding for a successful campaign in 2015 increased five times more from 2010.
“Marketing a campaign is essential not only for the success of a project but also to attract suitable investors,” adds Mutsuddi.
Venture capitalists using crowdfunding
Startups that seek venture capital investments on a regular basis launch crowdfunding campaigns. The main objective of these campaigns is to test their products and receive customer feedback before engaging investors. Many venture capitalists want startups to engage in crowdfunding before requesting for funds. Between 2010 and 2013, hardware startup enterprises that raised more than USD 100,000 on Kickstarter or Indiegogo have secured over USD 350 million from venture capitalists.
Some of the top vendors in the global crowdfunding market according to Technavio’s analysts are:
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