Crowdfunding has become a commonplace these days and is being used more and more by entrepreneurs to raise funds for technology products.
Presently, tens and thousands of innovators have been using it bring their ideas to the market. And, thanks to the growth of cryptocurrencies, crowdfunding is gaining new grounds.
According to the World Bank’s report, the industry will be worth more than the US $95 billion, going forward.
So far, there’s no specific information about the number of crowdfunding platforms. However, it’s being estimated that over 600 platforms are staking a portion of the crowdfunding pie.
Sure, ICOs are making it easier for entrepreneurs to launch crowdfunding campaigns without the use of platforms. But then, we have yet to figure out whether it will work or not.
Types of Crowdfunding in 2019:
Blockchain Technology and Cryptocurrencies
Presently, two of the best crowdfunding platforms are charging exorbitant fees that surpass 8% of the campaign’s contribution.
Such shockingly higher fees could prove hara-kiri to non-profit organizations and enterprises who survive on grants.
With Blockchain technology in the picture, the entire process becomes completely transparent. The integration of blockchain and cryptocurrencies is sure to bring down the fees drastically.
70% of the world’s population could be potential investors, but then do not have enough capital in their hand to fund different ventures. For that matter, even retail investors are looking to invest small sums of their money in enterprises. But then again, such enterprises only accept substantial capital.
Enter blockchain platforms like Roobee that has set up different funding models to assist venture financing. Roobee is offering micro-investment worth $10 enabling crowds to access Initial Public Offering (IPOs), investment funds, loans and more. The blockchain startup uses official and authentic investment return statistics.
Equity crowdfunding will change the way startups are being financed. No more angel investors and venture capitalists needed. With equity funding, in other words, collective funding, during the early stages of the start-up, will offer the participants greater potential for growth and returns, which a mature company may not offer.
Despite the many risks involved, it’s considered to the most promising type of investments
Rise of Regulated Platforms
Non-regulated platforms mostly don’t exist. However, with the rise of blockchain technology, several new platforms have come up that don’t exactly stick to regulations.
Today, crowdfunding follows national legislation, which means platforms have to follow the rules of the country they are operating.
But, this could make it difficult for the platforms to offer their services across borders. The European Union, to address the obstacles that arise from operating cross-border, has set up a one-stop-shop to help European investors to access its market easily. Nonetheless, the regulation of crowdfunding in the United States is multi-faceted.
For instance, reward-based crowdfunding platforms and even platforms that collect donations are mostly unregulated. However, in matters of crowd-lending, one needs to go by the registration and prospectus requirements of the Securities Act of 1933, except when an exemption is available.
This year, most of the platforms are likely to comply with at least one significant regulation in their respective regulatory of authorities they fall under.
With so many alternatives available, consumers most likely will not like to be part of platforms that are unregulated.
Bottom line: Crowdfunding has been witnessing continuous growth irrespective of geographical constraints. Though reports suggest that one of the ten crowdfunding projects fail, nearly 73% of the backers who are part of failed projects support other projects.
Equity crowdfunding, micro-investments, the blockchain, regulated platforms and more are sure to give real momentum to the crowdfunding industry in
Author Bio: This is Jennifer Warren, a Content Crafter for GoodFirms – a review and research platform for mobile app development, web development companies and more. The company publishes research reports on a time to time basis. Lately, the company also released a research report on Blockchains.