2,358 crowdsourcing and crowdfunding sites
The crowdsourcing and crowdfunding industry is picking up momentum at an exceptional rate. Validity of the models involved is now grounded in the ever-increasing size of the participatory crowd, the scale of the capital networks involved, and the unique value delivered to customers, communities, and investors alike. Astute expansion-stage venture firms are now decisively backing and further fuelling explosive high-growth in crowd-driven companies. With more than $280 million invested in 35 different crowdsourcing and crowdfunding platforms during 2011 — an average investment of $8 million per funding round — it is clear that the industry’s probationary period is over.
In a round up of this year’s major publicised investments in crowd-driven platforms, we consider how much money is being pumped into these models and innovations, who is receiving this rocket fuel, where it is coming from, and the implications for this disruptive industry.
Continuing to gain traction within the investment sphere, crowd-based platforms have already attracted over $52.8 million investment in December alone. At the beginning of the month, apps testing service uTest closed an oversubscribed Series D round of funding at $17 million, while the mobile patient and doctor Q&A platform HealthTap received $11.5 million. TaskRabbit, an online marketplace for outsourcing small jobs, garnered $17.8 million in a Series B round just last week.
Below is the full breakdown of widely publicised funding rounds closed by crowdsourcing and crowdfunding platforms over the last year. Source links direct to a published announcement source. Figures used in this editorial are best estimates only, and should be treated as such. There will certainly be some further undisclosed funding for 2011, and any updates or additions to the data below are much appreciated.
|99 designs||28.04.11||Series A||$35,000,000|
|Thumb / Opinionaided||02.03.11||Unattributed funding||$1,200,000|
Note: The information in the table has all been sourced via public sources. The Undisclosed entry reflects crowdsourcing companies that provided information to Crowdsourcing.org under NDA.
|TOTAL in 2011||$279,510,000|
|50% were Series A rounds|
|25% were Series B rounds|
|6.25% were Series D rounds|
|Total in Series A rounds||$118,550,000|
|45.4% of investment in 2011|
|Total in Series B rounds||$82,710,000|
|31.7% of investment in 2011|
|Total in Series D rounds||$54,000,000|
|20.7% of investment in 2011|
If you have any updates, changes or other information to add, contact us.
Capitalising on these young companies while they undergo intensive periods of initial development and expansion, 45.4% ($118.6M) of investment made this year was allocated in Series A rounds, while 31.7% ($82.7M) was attributed to Series B rounds, and 20.7% ($54M) to Series D rounds. The weighting of funds across these venture rounds reveals the predominance of early-stage capital being pumped into the crowd-based economy and is a demonstration of the confidence now being placed by forward-thinking investors in these crowdsourcing and open-innovation models. The investment community is starting to recognise the crowd-driven space as having high-growth potential, particularly regarding the transformative benefits for both public and private sectors in opening up their biggest challenges to the collective wisdom of the crowd.
Predominantly Silicon Valley centric, the largest venture investments currently being made are in crowdsourcing, open-innovation, distributed knowledge, and crowd-labour spheres. Crowdsourcing helps to solve previously intractable issues by tapping into the power of the crowd and is already amplifying and accelerating progress in many spheres. The associated business models are being validated as reliable revenue-generators with disruptive implications. On the other hand, only five of the 31 crowd-driven platforms that attracted widely publicised investment this year were focused on crowdfunding, and the total value of capital raised by crowdfunding platforms accounted for only 10–13% of all funding allocated to crowd-driven platforms this year.
Crowdfunding has a remarkable potential to challenge traditional venture models, however, bypassing the conventional gatekeepers of investment and democratising capital allocation. As this radical form of financing gains further traction in the global economy, we can expect to see more investment in the crowdfunding models directly — and through crowdfunding platforms themselves. For instance, this month the crowdfunding platform MicroVentures used its own platform to successfully raise a funding round.
The unparalleled transparency afforded by leveraging collaborative practices and tools in crowd-driven models is increasingly welcomed by investors, as it leads to disruptive business implications and transformative innovations through new venture acceleration. Forward-thinking venture firms are starting to capitalise on the opportunity to break down traditional barriers in venture investment and to optimise returns in an environment that directly engages both entrepreneurs and investors. As these firms begin to demonstrate their willingness to participate in ownership within this sphere and large sums of capital get pumped into the crowdsourcing and crowdfunding economy, it seems probable that the high-growth trend will soar.
Weighing this year’s total investment in crowdsourcing and crowdfunding platforms, venture capitalists appear confident that crowd-driven business models will continue to grow in the coming months and years. Investors will likely inject even more than $280 million into crowdsourcing and crowdfunding ventures next year. Following the evolution and growing ascendency of such innovative platforms will not only be interesting to watch, but also to participate in as part of the crowd ourselves.