Global Crowdfunding Market
The global crowdfunding market was valued at USD 20.34 billion in 2023. The global market size is further expected to progress at a CAGR of 18.24% from 2024 to 2029 and be worth USD 55.58 billion by 2029 from USD 24.05 billion in 2024.
Current Scenario
The crowdfunding market is gaining traction as an appealing funding option for sustainable enterprises or businesses. It is also the swift advent of studies on sustainability-driven crowdfunding that produced a broad range of theoretical viewpoints and a plethora of experiential evidence because of a larger variance over several research fields. Moreover, real estate crowdfunding is also getting popular, influenced by its potential to make investments in this sector greatly diversified, flexible, and accessible. Currently, investors have more options when investing in this sector than ever before. One of the main propellants of this market is the escalating use of technology. Additionally, the United States is the biggest crowdfunding source which has more than 500 million dollars in reward-based and equity crowdfunding. It is projected to expand at a pace of over 2 per cent annually in the coming five years.
Drivers
The surging interest in reward-based crowdfunding is driving the growth of this market worldwide. Progressively more entrepreneurs are starting projects on platforms for crowdfunding. On platforms like Kickstarter, businessmen post an explanation of the product or service for which they want financial aid coupled with the reward, project period, funding objectives, and price. Key players in the market include GoFundMe, Indiegogo, and Kickstarter, and changing laws and technological developments continue to fuel the growth rate.
Restraints
The complications related to legal compliances obstruct the expansion of the crowdfunding market. The absence of investor trust because of the escalating number of frauds and scams, intense competition between crowdfunding platforms, and restricted access to capital for specific industries or projects further impede the market growth rate. Moreover, challenges in reaching target customers for campaigns, expenses related to transactions and platforms, insufficient scalability for big projects, and uncertain regulatory framework and jurisdictional problems also derail the expansion of the crowdfunding market.
Segment Analysis
By Product
- Awards-based Crowdfunding
- Crowdfunding Auctions
- Others
The Award-based crowdfunding segment is the biggest category and holds a substantial portion of the crowdfunding market. According to a study released in ScienceDirect, among all the published research on sustainable-driven crowdfunding, the maximum was issued reward-based, i.e. 28 per cent, followed by donation-based with 24 per cent, and prosocial lending-based crowdfunding with 21 per cent. In terms of sustainability, not many articles have addressed return-centric lending-based i.e.13 per cent and equity-based crowdfunding with 11 per cent. These are the 2 types that present potential funding advantages to supporters.
By End-User
- Cultural industries
- Technology
- Product
- Healthcare
- Others
The technology segment is the leading category and is expected to maintain its position during the forecast period. The emergence of decentralized finance (DeFi) platforms revolutionalises this market by taking benefit of blockchain technology to improve security and transparency. This is driving the market share of this segment. It enables peer-to-peer transactions without the requirement for conventional financial mediators. This advancement is crucial due to the fact that it presents investment opportunities to a wider range of investors, facilitating them to engage in funding campaigns or drives without being restricted by geographical boundaries. Further, platforms such as TokenMarket show this transition, enabling a safe ecosystem for equity tokenization and transparent recording of transactions on the blockchain. Thus, expanding the segment’s market size.
Regional Analysis
North America remain the commanding region propelling the crowdfunding market worldwide. The region’s market growth can be attributed to the favourable legal landscape and varied incorporation laws enabling entrepreneurs to self-choose a governance state which suits them and goes with their business goals. Moreover, crowdfunding projects, schemes, and ventures generate more than 17 billion dollars in North America. The most highly crowdfunding projects continue to be those established in entrepreneurship and business ventures, whereas social causes hold around one-fifth of the overall crowdfunding estimate. On the other hand, the market in Canada is moving at a moderate pace. According to a report by the Canadian Venture Capital Association (CVCA), there is a sharp drop of 48 per cent in the first half of 2024 in the country’s seed investment value. The previous year in 2023, this investment was fairly robust generating 1.1 billion dollars throughout 383 deals, depicting a major 21 per cent average yearly growth rate since 2013.
Recent Market Developments
· In September 2024, SeedBlink, a European platform for securities crowdfunding, started ‘Raise Hub’ which is a new service planned and created to simplify and modernise the procedure for European Startups for generating funds.
· In August 2024, Kuwait formally introduced securities-based crowdfunding platforms, achieving a major milestone in the nation’s financial technology dynamics almost 2 years after the first draft or version for fintech regulation was presented.
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