Crowd funding's meteoric rise in the last few years has rapidly turned it into a money-generating machine.
In news that surprises precisely no one, a research firm specialising in crowdsourcing, called Massolution, has revealed that crowd funding is a growing industry, experiencing a massive increase in momentum between 2011 and 2012.
While we all know that sites like Kickstarter and Indigogo are getting bigger all the time, with more and more start-ups turning toward crowd funding to get themselves off the ground. But, between 2011 and 2012, crowd funding experienced a massive growth spurt, turning into a multibillion-dollar industry — with a total of US$2.7 billion invested across the 308 platforms that Massolution surveyed.
Donation- and reward-based platforms, such as the aforementioned Kickstarter and Indiegogo, grew 85 per cent, bringing in US$1.4 billion, up from around US$75 million, and lending-based crowd funding grew 11 per cent, to US$1.2 billion. Meanwhile, equity-based crowd funding grew 30 per cent, to US$116 million.
The US accounted for most of the growth; in North America, crowd funding grew by a massive 105 per cent.
Massolution chief executive Carl Esposti expects to see crowd funding experience even more of a growth spurt this year. He said in a statement, "Consistent with our 2012 forecast, total crowd-funding volume nearly doubled last year, and with regulatory bodies continuing to pave the way, we expect global crowd-funding volumes to exceed US$5 billion in 2013."
While Massolution may have a vested interest in touting the virtues of crowd funding, though, it's important to remember that it fails for more projects than not. With 39,077 projects successfully funded and 50,160 failed, Kickstarter has a success rate of just 43.79 per cent — so it's vitally important to do your due diligence before launching anything to a crowd-funding platform.