2013 has been a great year for crowdfunding: several new actors entered the market, introducing this new financing method in many different sectors; an increasing number of governments started to take into account the new phenomenon and, last but not least, early rumors say that the overall market’s value has doubled (now $5 billion) compared to the the year before.
However, when looking closer, the apparently rapid diffusion of crowdfunding reached only a small part of the potential market: just a small part of the population knows what crowdfunding is. Thus, there is still a long way to go before crowdfunding will eventually establish itself as a new paradigm in the financial industry, leaving enough time for us to see, comprehend and shape how the phenomenon evolves.
Predictions for 2014
Credit to: blog.search-mojo.com
Crowd Valley has been active in the international crowdfunding scene for several years now and has been following closely the evolution of the market on a global level. Based on data collected during 2013 the company is able to identify the major trends in the crowdfunding space and make a few predictions on how the situation will evolve in 2014.
- Horizontal diversification. During the past year, crowdfunding has been adopted in different sectors, like real estate investing, diamond trading, renewable energies, etc. It is likely that this year crowdfunding will find its way also in other sectors and that it will be used for other asset typologies.
- New regulations for securities crowdfunding will be released. In 2013, national governments showed a growing interest for the phenomenon and some of them started working on a specific regulation in order to make online investing safer. Until now, Italy has been the only country releasing a final regulation for equity crowdfunding, but it is most likely that this year new regulations will be released by Australia, France, the UK and the US.
- International expansion. This trend started in 2013 and Crowd Valley expects it will continue this year, with the major platforms expanding outside the national borders. Internationalization benefits the platforms and their customer bases, by providing to the former a market position that it is not easy to imitate and to the latter opportunities for cross border investments.
- Professional investors entering the market. As shown by Crowd Valley’s recent Global Crowdfunding Market Report, a number of actors from the financial sector are looking with interest to this new financing method. In particular, more and more business angels, broker-dealers and private equity funds will move into the sector, as national governments release specific regulations for securities crowdfunding.
- Market starts to consolidate. In the past couple of years many crowdfunding platforms have launched. Reward crowdfunding website are particularly numerous. In 2014, the market rules will start playing their “natural selection” role, by pushing out the least active platforms and benefiting the most established ones.
- Local crowdfunding. As seen in 2013, local crowdfunding platforms, that is platforms that only allow investments in projects based in a specific area, proved to function fine. Being so focussed they benefit of a strong position in a niche market, where there is no much space left for other players, while people seem to like investing in something that is based in their same community. It is thus predictable that new local crowdfunding platforms will launch in different areas.
2014 will be certainly another year of ferment for crowdfunding. The phenomenon will grow worldwide, mostly pushed by the rapid growth of securities crowdfunding which is emerging in many countries as a valid early stage financing source. One reason for this is to be found in the difficulties startups and small businesses have been facing during the past years: banks’ loans are more and more difficult to get, while traditional early stage investors, like business angels and VCs, often are not so easy to access by any startup.
Crowd Valley will keep following closely the market’s evolution and will make available its expertise, contributing to make crowdfunding a valid and safe financing method that will slowly change finance, rendering it more transparent, direct and cost-efficient.
Photo Credit: Mr. Magoo: https://bit.ly/p/8eWNo
Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives.
During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem.