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admin
10-20-2013, 09:44 PM
Guys, the 2013 report by the World Bank on Crowdfunding was just released, and it is quite an eye opener. Here is a link to the full report: http://www.infodev.org/infodev-files/wb_crowdfundingreport-v12.pdf

It's very long, and make an awesome read, however I will give some of the stats and etails below that really stood out to me:

Key Points of World Bank Crowdfunding Report:
- The developing world has the potential to leapfrog developed countries.
- Crowdfunding has emerged as a multibillion-dollar global industry.
- By leveraging technology, crowdfunding can serve as an enabling mechanism for new venture formation, job creation and inclusive economic growth.
- The single most predictive factor for the rate of Crowdfund emergence is social media penetration.
- After 7 years of Equity Crowdfunding in Australia, there has been very very little fraud reported.
- High net worth does not always equate to high financial IQ.


Interesting Stats and Predictions:

- In the Developing World alone, by 2025 there could be up to $93 billion in funds available annually for crowdfunding investments. $50 billion alone in China. This equates to 180% of Global Venture Capital Investments currently!
- From an income perspective, 240-344 million developing country households could participate in crowdfunding.
- Crowdfunding has expanded at a 63% annual compounded rate from 2009-2012, and shows no signs of slowing up it's pace.
- 91% Increase in equity based crowdfunding platforms in North America in 2012
- Out of 43,193 different projects funded on Kickstarter, there has only been 4 reported cases of possible fraud. This represents a 0.01% fraud rate.

- Total Crowdfund Investing Platforms Per CountryUS - 344
UK - 87
France - 53
Netherlands - 34
Germany - 26
Canada - 34
Australia - 12
India - 10

SocialCam
10-27-2013, 09:16 PM
A Few thinks I took away from this report.

#1 The US is clearly the leader, but it also has the largest population in the Western world. Per Capita it seems like the UK would be the leader, which is a bit surprising.

#2 If this report is accurate and by 2025 China accounts for over $50 billion a year in crowdfunding investments, that would likely mean that the world market could approach $1 trillion. If that's the case, the banks better watch out.

#3 Fraud has been virtually non existent thus far. Having said this, things may change when equity/larger investments are involved. Looking at Australia and the UK's equity history though, it doesn't seem like fraud should be a major concern. The SEC should relax any reporting requirements they have proposed in my opinion.

jainhost
11-04-2013, 05:26 AM
Great News! In the ongoing effort to identify what works and focus on improving performance in those areas, this is a good reminder to continue embracing innovation.

jordanbaines
11-04-2013, 01:55 PM
Absolutely love this document, especially given the format they chose to use in relating potential penetration and adoption patterns in developed and undeveloped economies. As well, the methodology for coming up with projections, far from the idle speculation of someone like Fred Wilson in examining the threat to VCs, provides much more clarity on what it's going to take to for the industry to push toward the stratospheric gains suggested on the way to 2025.

SocialCam, I love your takeaways, and I'd be interested in augmenting your third point. Yes, fraud as a unique threat to crowdfunding has proven to be more myth than not over the course of the last several years, especially given the track records of ASSOB, Seedrs, etc. This alone wouldn't be enough to justify the SEC to diminish the reporting requirements proposed. Instead, and I think the Canadian NCFA nails this in their arguments for Canadian equity crowdfunding, the significant additional cost for crowdfunding because of these regulations would drive funders to seek less expensive capital or found themselves in countries with fewer regulations, enabling that less regulated country to benefit from entrepreneurship in a much more significant way. Part of what might fuel developing economy crowdfunding growth would be an openness to fewer funding and reporting regulations, at least until such time that a common IFRS rule on how to report crowdfunding is nailed down.

SocialCam, I think you're asking for the right thing here, in terms of competitiveness for the US (my bias is transparent here, as a citizen); although, I'm not sure I know what would make sense from a regulatory standpoint to help the regulatory authorities oversee crowdfunding effectively and be good stewards for the industry.

startingtrends
11-04-2013, 09:14 PM
#2 If this report is accurate and by 2025 China accounts for over $50 billion a year in crowdfunding investments, that would likely mean that the world market could approach $1 trillion. If that's the case, the banks better watch out.

Those are some whopping projections, not far fetched either when you consider how fast the industry is growing.