|By Bob Gourley||
|January 18, 2013 11:12 PM EST||
2012 was an amazing year for crowdfunding. Within the span of a three month period (March – May 2012), the largest crowdfunding sites including Kickstarter, Indiegogo, Grow VC, and Rockethub doubled their daily traffic and donation volumes.
Between 2008 and 2011, Kickstarter’s issuers raised over $200 million in sales. In 2012, the site raised an additional $145 million. On Indiegogo, another popular crowdfunding site, campaigns raised 20% more money in 2012 than they did in 2011. Substantial growth was also seen in the debt crowdfuding industry. Between 2007 and 2011, the LendingClub (the largest U.S. peer-to-peer lender) facilitated the lending of more than $1 billion dollars. In 2012, the LendingClub grew by an additional $1 billion.
The crowdfunding industry is expected to continue to boom in 2013. The debt crowdfunding industry is predicted to add another $1 billion in 2013 to the $3 billion reached in 2012. Firms like LendingClub, Zopa and Prosper are expected to grow globally and to continue their success. International expansion will fuel crowdfunding growth in 2013, as Kickstarter launches in the UK and Indigogo expands into Germany and other countries. By the second quarter of 2013, the number of crowdfunding sites is expected to double from 700+ to 1500+.
Another interesting development to watch in 2013 is how broker-dealers use “the Rich Man’s Crowd Funding” Strategy. Using Regulation D, 506, which allows for private capital to be raised by 35 non-accredited investors and an unlimited amount of “rich people”, brokers will be able to use crowdfunding as a tool for their clients. Leading broker dealer Gate Technologies just signed up with SoMoLend and CrowdFunder in preparation for this type of move. It is expected that we will see crowdfunding-for-equity players partner up with broker dealers in the first quarter of 2013 (although Crowd Funding for Equities most likely will not become a legal SEC/FINRA regulated program until early 2014). By July of 2013, many predict that there will be more than 100 startups that have raised at least $1 million through crowd funding. By 2014, crowd funding will be a generally recognized device to raise capital and the general public receptions will come in 2014 when corporate American pubicly accepts it.