The crowdfunding industry is skyrocketing, doubling its growth each year.
According to Massolution, “Global crowdfunding experienced accelerated growth in 2014, expanding by 167 percent to reach $16.2 billion raised, up from $6.1 billion in 2013. In 2015, the industry is set to more than double once again, on its way to raising $34.4 billion.” In this blog post, we will be exploring the size and growth of the alternative finance market. How big is each region’s total funding volumes and which region and type of crowdfunding model is experiencing the fastest growth?
How Big is the Crowdfunding Market by Region?
Short answer: Big. Over the last four years, the annual trend in funding volumes has been continual YoY growth. Worldwide crowdfunding volumes increased from $2.7 billion in 2012 to reach $6.1 billion in 2013, representing a 125% YoY growth. In 2014, worldwide crowdfunding volumes reached an astonishing $16.2 billion.
While North American remained the region with the largest total funding volume across all crowdfunding models at $9.5 billion and an annual growth rate of 145% in 2014, the region experiencing the fastest growth is Asia. In 2014, Asia topped Europe to become the second largest crowdfunding region by a lead of $138 million. The Asian market grew at an astonishing 320% to reach $3.4 billion in funding volume. Much of this substantial growth is driven by the popularity of lending based platforms which has resulted in an increase in the number of crowdfunding platforms and associated crowdfunding volumes. Much of this growth stemmed from China.
Growth by Crowdfunding Model
Among the different types of crowdfunding platforms, lending-based crowdfunding has led the market, growing 223% in 2014 to reach $11.09 billion. This represents 68% market share compared to 57% in 2013.
Donation-based crowdfunding in 2014 remained significant at a funding volume of $1.94 billion resulting from a consistent annual growth rate in 2014 of 45%. However, as a percentage of total worldwide crowdfunding volume, it has dropped 10% over 2013 to contribute just below 12% in 2014, showing a steady decline as a percentage of the whole over the last three year period. Within this category, North American was the highest performing region, increasing 81% in 2014 to reach $959 million, with Europe as the second largest region at $707 million in total funding volume, resulting from an annual growth rate of just over 40%.
Reward-based crowdfunding continued to grow in 2014 by 84% annual growth to reach a total worldwide funding volume of $1.33 billion. This was largely attributable to a strong US market, which hosts the top 5 reward-based crowdfunding platforms.
Equity-based crowdfunding volume has also experienced rapid growth in 2014. Volumes nearly tripled compared to 2013, with an annual growth rate of 182% to reach $1.11 billion. However, the two largest markets, North American ($787.5 million) and Europe ($177.5 million) grew differently with respective annual growth rates of 301% and 145%.
The article was originally published on DealIndex. Interested in reading more insights on the equity crowdfunding landscape? Please download DealIndex’s “Democratising Finance” research report or register to DealIndex Dashboard.