2,800 crowdsourcing and crowdfunding sites
Editor’s Note: In this guest post, CrowdsUnite CEO and founder Alex Feldman predicts the shape and scope of the crowdfunding industry in the coming years. It appears exclusively on Crowdsourcing.org.
Due to the passage of the Jumpstart Our Business Startups (JOBS) Act and a global explosion of crowdfunding platforms, 2012 was an amazing year for crowdfunding — and 2013 is poised to be even bigger.
Three major trends currently dominate the industry: platform consolidation, niche platform growth, and the development of alternative crowdfunding solutions. One of the earlier examples of consolidation occurred during the summer of 2012, when EarlyShares acquired HelpersUnite. More recently, two U.K. reward-based platforms, Crowdfunder and Peoplefund.it, merged to defend their turf against Kickstarter. Meanwhile, white label solutions like Launcht, invested.in, and catarse.me fueled a rapid expansion of niche platforms focused on a specific region, category, or demographic. And finally, technologies like SelfStarter and ignitiondeck helped some crowdfunders forgo crowdfunding platforms altogether.
In the future, the crowdfunding industry framework will resemble last year’s trends, each of which offers a different kind of value to the organization or the individual raising money. Here are the crowdfunding platforms and tools that will proliferate in 2013 and beyond:
Commoditized / Open Source Crowdfunding Services
These “do it yourself” crowdfunding solutions will offer only technological infrastructure without the benefits of an investor community. They will have minimal or no fees due to the pricing pressure of offering commoditized services. These tools will attract companies or people who already have sizable communities of their own or who feel confident in their ability to market themselves without outside help.
A few large 2012 campaigns helped shine the spotlight on these alternative crowdfunding technologies. After Kickstarter rejected Lockitron, a “smart lock” for households and businesses, development company Apigy decided to build its own tool to fund the gadget. The move paid off big time: Apigy has raised nearly $2.3 million by offering Lockitron pre-orders using SelfStarter, a free, open source solution that mimics the Kickstarter aesthetic but not the fees that come with the service. Wordpress plugin ignitiondeck (available for a small fee) is another custom crowdfunding solution. Cloud Imperium Games used ignitiondeck to raise more than $5.3 million on its own website for Star Citizen, a space combat video game, in addition to the $2.1 million it raised via Kickstarter.
These platforms will focus on specific industries, regions, or demographics. MedStartr, a crowdfunding platform for medical projects and technologies, is a good example of this. The company validates every project on its site using a clinical review. By stamping down on fraud firsthand, MedStartr greatly increases the credibility of its platform’s campaigns. In the future, there will be an abundance of crowdfunding platforms that perform background checks and validate the quality of projects in their particular industries. Equity crowdfunding sites like CircleUp and FundersClub already employ such safety measures.
By definition, niche crowdfunding platforms will be more insular, as their members tend to be more homogeneous and exclusive. The University of Vermont Start website (powered by Launcht) is an example of such a community. UVM Start, an exclusive platform, connects university alumni with student entrepreneurs. Other educational institutions will likely embrace crowdfunding to encourage student entrepreneurship and / or to increase their endowments.
A few crowdfunding platforms will continue to host massive, wide-reaching communities. The built-in communities and brand recognition of these large sites help generate project exposure, but bigger platforms also tend to feature higher fees for successful campaigns than smaller sites and services.
Kickstarter currently leads all crowdfunding platforms in web traffic and dollars pledged. In 2012, it had 86 million unique visitors, a 252 percent increase from 2011. The more than 2.2 million people who backed a Kickstarter campaign last year cumulatively pledged $320 million. For the foreseeable future, Kickstarter will remain the dominant crowdfunding platform (in sheer numerical terms, at least).
Not that the other sizable platforms will rest on their laurels. To compete, some of these larger sites will embrace multiple crowdfunding models, offering some combination of donation-, reward-, equity-, and debt-based crowdfunding in one place. Indiegogo and RocketHub, two of the largest reward-based platforms, stated that they will consider offering crowdfunding for equity once the SEC implements the final JOBS Act regulations.
Among the three categories, niche platforms will likely see the largest upsurge in growth because of their very specific focus. But all three crowdfunding categories (“do it yourself” services, niche sites, and large platforms) will continue to grow in scale and activity this coming year, and that’s good for everyone involved. This is going to be a very exciting year for crowdfunding platforms, and I can’t wait to see how it plays out.