Every Hour, $87,000 Is Raised Through Crowdfunding

Across the world, crowdfunding raises $2 million per day. That's the equivalent of $87,000 per hour, or $1,400 every minute.

Currently 90 percent of the world's online population has access to crowdfunding, according to the second-quarter global report on crowdfunding by The Crowdfunding Centre, a London-based industry data analysis firm. Crowdfunding now reaches more than 160 countries, according to the report, which was released today.

The idea of raising money by soliciting small sums of money from a large group of people is not new, but as the world has moved online and payment technology has become increasingly seamless, crowdfunding has experienced a historic coming-of-age growth spurt. "The Internet is enabling a new type of democracy in funding," said Joe Cox, economist at the University of Portsmouth Business School where crowdfunding is studied closely, in a statement by The Crowdfunding Centre.

The map, embedded below, illustrates the number of successful crowdfunding campaigns by country. To be counted in this visualization, a campaign had to be a minimum of 100-percent funded.

"Seed funding is now self-seeding across the globe. It's gone viral," said Barry James, founder and CEO of The Crowdfunding Centre, in a statement. Throughout the world, there were an estimated 50,000 pledges to a crowdfunding campaign every day in the second quarter, according to the report. That's 5 million pledges in April, May and June.

The United States, home to both Kickstarter and Indiegogo, saw more crowdfunding activity than any other country. European nations such as the U.K., Germany and France also scored among the highest for crowdfunding activity. The top 10 most popular countries for crowdfunding, ranked by number of successful campaigns, are as follows:

  1. United States
  2. United Kingdom
  3. Canada
  4. Germany
  5. France
  6. Australia
  7. Italy
  8. Netherlands
  9. Spain
  10. Japan

Despite the meteoric rise of crowdfunding, which only rose to popularity in the last few years, The Crowdfunding Centre says that the best is yet to come for the industry. In particular, equity crowdfunding, where individuals give away bits of ownership of their company in exchange for cash, has an enormous untapped potential.

In the U.S., equity crowdfunding is currently legal for accredited investors -- those deemed sufficiently wealthy to make risky investments and withstand loss -- but not for unaccredited investors, or unprofessional investors. In April, 2012, President Obama signed a law that made equity crowdfunding legal for unaccredited investors, and regulators began working on its implementation. The rule-writing process is now into its third year, as regulators and innovators debate how best to bring this new finance tool into use.

"Equity crowdfunding has, in some ways, the greatest potential -- certainly in terms of ability to support growth companies with larger amounts of finance that would register strongly on the economic needles as the world economy continues to be starved of such capital," the report reads. "But it's increasingly evident that the old wine-skins of outdated regulatory and legislative approaches are needlessly constraining progress because they fail to take account of the very different dynamics and characteristics of transparent, democratized finance."

This article is written by Catherine Clifford and was published on Entrepreneur on 6 October 2014 (http://www.entrepreneur.com/)

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