Crowdfunding has quickly emerged as an extremely popular and profitable option for entrepreneurs to validate their ideas, gain exposure, and gain funding. Crowdfunding revenue tripled from $530 million in 2009 to $1.5 billion in 2011 and is expected to continue rapid growth in the coming four years.
Crowdfunding boasts a 74% compounded annual growth rate. It is an incredibly important funding option because other funds such as SBA (Small Business Association loans) have become significantly less available in the past few years.
In fact, crowdfunding has gradually become more popular during the last years, from 2012 to 2015 crowdfunding raised worldwide : $34.4 billion USD and only in 2016 in the US raised 738,9 billion USD in total (source: https://www.startups.com/library/expert-advice/key-crowdfunding-statistics)
As we can see from the above image, the crowdfunding business is growing exponentially, especially because it represents a new and more effective way to raise funds as well as connect with future and potential customers.
Roughly 50% of Reg CF Crowdfunded Companies are Meeting Their Crowdfunding Goals
In a survey made by Jake Fisher in 2017, analyzing 119 completed campaigns, 62 have hit their funding goals. Moreover, he made an additional survey on 88 currently open campaigns, of which 25 had already hit their initial funding goal. The success rate has been proven to be very high.
Almost $20 million has been invested in the campaigns that have concluded successfully.
The average individual investment has been $833, and most campaigns have somewhere just north of 300 investors. The average amount raised is a little over $226,000, and on average it has taken 45 days for each successful campaign to hit their target amount. Source (link)
Kickstarter and examples of successful campaign
In order to understand the potential of this way of crowdfunding, here are some of the most successful crowdfunding campaigns made on Kickstarter, the most famous crowdfunding platform:
· Musician Amanda Palmer raised US$1.2 million from 24,883 backers in June 2012 to make a new album and art book.
· Critical Role raised a total of $11,385,449 with 88,887 backers in April 2019 to make an animated TV show based on their Twitch live-streamed Dungeons & Dragons game. Not only did the campaign exceed the $750,000 goal but the campaign also broke the Kickstarter record for most money raised for projects in the “film” category.
· Mystery Science Theater 3000 raised a total of $5,764,229 with 48,270 backers in December 2015 to create fourteen episodes of the new series, including a holiday special.
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