A timely global survey of crowdfunding platforms

Trade publication Crowdfunding.org have just released a survey of global crowdfunding activity in 2011. The full report comes in at a $1000, but I browsed through the free abridged version and pulled out some useful findings.

They break the market down into four categories based on what the person giving funds can expect to receive in return: equity, reward, lending, donation.

  • Equity: funder gets ‘stock’ in the company
  • Reward: funder gets a gift, i.e. material object or service
  • Lending: funder gets their money back plus a commission after a set period of time
  • Donation: funder gets personal satisfaction

The overall market is getting more crowded:

As of April 2012, 452 crowdfunding platforms (CFPs) were operating globally… North America leads other regions in terms of the total number of crowdfunding platforms, however Europe is gaining percentage share within the market in aggregate.

Reward-based and equity based platforms are higher in numbers in Europe than in North America

The number of equity and reward CFPs are predicted to grow at 300% in 2012

And in map form:

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Screen Shot 2012-05-11 at 4.30.49 PM

Source: crowdfunding.org

Some insights into the performance of the various types of CFPs:

Crowdfunding for financial return (i.e., collectively, equity-based and lending-based crowdfunding) is most effectivefor digital goods such as applications or computer games,films, music, or literature. It also raises the largest sums of money per campaign. More than 80% of the campaigns in this category raise above $25,000.Donation-based and reward-based crowdfunding for cause-based campaigns that appeal to funders’ personal beliefs and passions perform best (e.g., environment, community, faith). Donation-based and reward-based crowdfunding for art and performing arts projects drive less funding volume than the mainstream media suggests. The campaigns in these categories are much smaller, with two-thirds of them generating less than $5,000.

Of the four categories, Brickstarter is most suited to donations or rewards, so let’s look at those:

Of the funds raised on donation-based and reward-based crowdfunding platforms, 63% are paid out to projects that draw less than $5,000 in funding. Only 10% are paid out to projects that draw more than $10,000 in funding. The remaining 27% of all funds raised by donation-based and reward-based crowdfunding platforms are paid out to projects that raise between $5,000 and $10,000

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Source: crowdfunding.org

Based on conversations with some CFP operators, we have been operating under the informed assumption that the ‘curve’ of payments over the life of a fundraising campaign follows this image. Rapid rise, lull in the middle, and then, if successful, a rapid rise to meet the goal. The Crowdfunding.org report tells a different story.

In contrast to popular belief that the first 25% of funds take longer to raise than the last 25%, our data shows it takes 2.84 weeks on average, across all categories, to raise the first 25% of the funding goal and 3.18 weeks on average to raise the last 25% of the funding goal… Approximately 45% of all CFPs require investors to deposit money in escrow accounts. 63% use PayPal as a payment method.

Again, let’s zoom in on the data for our two likely categories. Campaign time-to-completion (in weeks) data based on a sample of 83 CFPs:


  • Launch to completion: 10.0
  • First 25% milestone: 2.9
  • Last 25% milestone: 3.6

Donation based:

  • Launch to completion: 10.2
  • First 25% milestone: 3.6
  • Last 25% milestone: 3.3

Operational aspects of the site can be a deciding factor for potential funders. In other words, if the site is flakey, people will bail:

Platform reliability (i.e., up-time) is a differentiating factor of choice for reward-based CFPs.

Finally, the income stream(s) for the site itself. Most of the CFPs take a percentage of the total funds raised. However, some also employ a fixed fee.

An additional source of income with some CFPs (12% of our survey respondents) is to charge funders a fixed fee, in the region of $15 (median), per campaign.

Why do I blog this?

On Tuesday we were having a discussion in the office about the “currency” of the site, so this report which gives us insights into the financial side of crowdfunding is very timely. It’s tied to a number of aspects which will effect Brickstarter’s long term health. First and foremost, the currency used on the site has to be neutral. When considering ways to crowdfund public projects, there’s always a risk that the system preference those with more cash to throw around. That’s not the way democracy works (or it shouldn’t be). Second, the currency must be relevant and meaningful to the users of the platform. For this reason, we are intuitively gravitating towards a zero-sum option. The endless quantity of ‘likes’ on Facebook and other sites devalue the meaningfulness of ‘paying’ a like to something. Finally, we have to consider Sitra’s exit strategy for Brickstarter. Who will operate the platform in the long term? There’s a strong case to be made for Brickstarter being part of the municipal service offering. It could also be operated by an NGO or charity. There’s even a case to be made for it to operate as a private venture. The field is wide open, but one of the tensions we must resolve is how the currency of Brickstarter is relevant to both the users of the platform and its operators.

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