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Crowdfunding Growth Is Huge

Crowd Funding Concept.Crowdfunding Growth is Huge. In the past 5 years the crowdfunding industry has undergone remarkable growth – estimated to be around 1,000% – while, at the same time, it has provided around $10 billion in funding to startups and small businesses.

The crowdfunding industry’s exceptional growth is not likely to slow down this year either, since, according to early forecasts, the market is expected to grow by an additional 92%.

The main drivers for this year’s growth are to be found in the milestones that have been recently achieved by the industry. Startups are becoming much more attuned to the idea of raising seed and equity finance by this route.

For instance, in the US, the removal of the 80 year-old ban on general solicitation and the SEC’s announcements surrounding Title III of the JOBS Act, to allow non-accredited investors to invest in equity capital.

Additionally, industry awareness has multiplied over the years, with news headlines covering crowdfunding increasing 9,900% since 2004. Crowdfunding is not only a source of seed money, or now equity, it is an extraordinary social marketing tool. This info from Crowd Valley.

Crowdfunding Innovations

Crowdfunding innovations abound since the marketplace is young and the scope for specialization is considerable. One that I know well is Crowdrooster, started by Italian Francesco Gatti and others in London and now looking to implant itself in the US market. Crowdrooster is  a product discovery and crowdfunding community with an e-commerce twist; connecting brands and innovators with early adopter consumers who vote with their wallets on the concept products of tomorrow. You can sign up on Crowdrooster’s placeholder website, as they come out of beta and before the new platform is launched in April 2014. Another quite similar venture, but devoted to women entrepreneurs is Plum Alley, a site where women entrepreneurs and innovators can access crowdfunding, e-commerce and help from experts.

I’m particularly interested in another upstart is Upstart, founded by ex-Googlers in 2012. When I founded my business in 1982 (history!), I had loan money from my bank on the basis of an ISA, though they  stopped offering such deals a few months in. Upstart agreements are often called “Income Share Agreements” or ISAs, where repayment is defined as a small and pre-determined fraction of earned income, rather than a fixed monthly dollar amount. ISAs aren’t new – and their popularity is growing. There’s even a bill in congress to make ISAs the standard for federal student loans. The reason is obvious: income share agreements are designed to be affordable at all times. When you earn less, you pay less, and when you earn more, you pay more. One of Upstart’s advisors is Jessica Jackley a co-founder of Kiva and a founder of the ill-fated Profounder.

MicroVentures is yet another innovator that connects Angels and Startups. It is an online equity crowdfunding platform that conducts detailed due diligence on startups and if approved, then helps startups raise capital from angel investors. They consider themselves a crowdfunded investment bank for early stage startups, and their equity crowdfunding platform is managed by experienced registered broker dealers. 

Founded by two ex-iRobot people, Dragon Innovation is a crowdfunding platform that deals exclusively in hardware. I think we are going to see more and more sector and subject specific crowdfunding operations as the market begins to mature. Many other platforms I have listed on Startup Owl’s Crowdfunding page. Go take a look, and help yourself!

PLEASE NOTE: There is tons of useful stuff on Startup Owl, a site that’s been going for a dozen years. So keep browsing, but know that the founder, Will, now devotes most of his time and energy to his new website that you should definitely visit: https://venturefounders.com

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