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Crowdfunding Market Sees 259% Annual Growth

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I've been following the success of Crowdfunding since the very beginning. Since I knew it would become a very important source of funding for entrepreneurs.

And today I want to tell you just how big it has become.

To begin, "Crowdfunding" is getting a group of regular individuals (versus banks, venture capitalists or angel investors) to collectively fund your venture.

There are several "Crowdfunding platforms" or sites that facilitate the funding transactions between you and those who "back" or fund your company.

These platforms include Kickstarter, IndieGogo, RocketHub and PeerBackers among many others (the number of platforms seems to be growing monthly).

But Kickstarter remains the biggest. And Kickstarter recently released statistics of what happened on its site in 2011. These included the following:

  • Launched Projects: 27,086
  • Successful Projects: 11,836
  • Dollars Pledged: $99,344,382
  • Total Visitors: 30,590,342
  • Project Success Rate: 46%


Now, let's compare that to Kickstarter's 2010 stats:

  • Launched Projects: Up 143.4%
  • Successful Projects: Up 202.7%
  • Dollars Pledged: Up 259.4%
  • Total Visitors: Up 268.8%
  • Project Success Rate: Up 7.0%


To me, the most exciting thing was the 259% increase in dollars pledged, which is the amount given to entrepreneurs by others to fund their ventures. This amount grew from $27.6 million in 2010 to $99.3 million in 2011.

My best assumption is that 40% of all Crowdfunding raises are done on Kickstarter. So, my estimate of total 2011 Crowdfunding raises is $248 million. Not bad.

Here are some lessons and key thoughts I'd like to share with you:

1) Kickstarter is one of the pioneers in the Crowdfunding market. As a first mover, it won't necessarily win, but if it continues to innovate it probably will.

2) There are now many different Crowdfunding platforms. The newer "me too" ones must innovate in order to compete.

3) The trend is clear. Crowdfunding is growing like crazy and is now a significant source of funding.

4) Crowdfunding has an incredibly high success right making it a no-brainer to use. As shown above, the "Project Success Rate" or percent of entrepreneurs who post projects and get funding is 46%. Compare that to angel funding, which has a success rate of just 15%. And compare it to venture capital which has a success rate of less than 1%.

5) It will get harder to raise Crowdfunding. Right now Crowdfunding is a bit like the California Gold Rush which started in 1848. Those that went to California first were MUCH more likely to find gold than those that came later. The same will be true of Crowdfunding. As more and more entrepreneurs seek this form of funding, the project success rate will go down. Right now, it's still a novelty and people will fund ideas that seem interesting. Those same funders will be a lot more stringent when they start receiving tons of Crowdfunding requests a year or two from now.

The bottom line is that the Crowdfunding business is doing great right now, which is great news for entrepreneurs like you.

 

Want Crowdfunding for your business? I recently developed a simple-to-follow program called "Crowdfunding Formula."

The program is a series of videos I recorded that walk you through each of the 14 steps to raising Crowdfunding. Many of you have already joined the program and raised money.

If you haven't, click here to get Crowdfunding for your business now!


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