Equity Crowdfunding State of the Art: Circa 2014

Over $200 Million Invested Online Via Equity Crowdfunding Platforms

Equity Crowdfunding 2014 report infographic
Infographic: 2014 Equity Crowdfunding Market. OurCrowd

Crowdfunding (What is Crowdfunding?) of all types is growing by leaps and bounds. Kickstarter (All about Kickstarter) recently surpassed $1 billion in funding for creative projects, products, and technologies. EquityNet, a platform for the crowd to invest in companies, surpassed $230M in investments in companies listed on its site. Chinese site, Alibaba announced it would provide Chinese investors the opportunity to invest in new films and within just a few days, sold out.

Peer-to-peer lender for college expenses, Sofi just raised $80 million in financing.

Crowdfunding is, by all measure, enjoying a bull market in interest, money, and investments.

The Equity Crowdfunding Market: 2014

For this article, I'd like to focus squarely on the equity crowdfunding market (what is equity crowdfunding?). Unlike Kickstarter-like crowdfunding where people back projects with a donation, equity crowdfunding backers make actual - albeit, small -- investments in real companies.

The reason that you don't read too much about this market is that it's still limited to the wealthy (though there is lots of regulation in the works to open this up to the rest of us). Even though equity crowdfunding is currently relegated to a smaller number of investors (there are 8 million high net worth investors in the US), there's still a lot of activity occurring in this space.

My firm, OurCrowd, recently released an interesting infographic that breaks down the activity in the equity crowdfunding market to date with a look out to the future.

Number of potential participants in U.S. equity crowdfunding

  • There are 8 million high net worth investors in the U.S. (in crowdfunding terms, these investors are accredited according to their net worth or high annual income levels)
  • 3% of these investors invest in early stage, private companies (they are angel investors)
  • That means 264,000 U.S. investors could be using equity crowdfunding platforms right now

Number of potential participants in global equity crowdfunding

  • Using various sources, OurCrowd estimates that the U.S. accounts for 50% of the global angel investor population
  • So, the global population of investors who could participate on equity crowdfunding platforms amounts to half a million people
  • 10% of that population (50,000) has already registered on numerous equity crowdfunding platforms
  • Industry averages show that 10% of people registered on these platforms actually invest on them -- so, only 5000 people have deployed investment capital via equity crowdfunding

Amount of investments raised via equity crowdfunding

  • The infographic says that the the top 10 equity crowdfunding platforms around the world have collectively raised $393 million to date in investments for companies listed on their sites
  • 460 companies have raised money through equity crowdfunding platforms to date
  • That number should be thoroughly trounced this year as $90 million dollars of investments were made during the first quarter of 2014 alone ($204 million was raised in all of 2013).
  • OurCrowd estimates there will be $700 million invested on equity crowdfunding sites in 2014 ($10 billion should change hands on all types of crowdfunding this year)

    Top 10 equity crowdfunding platforms

    • The top 10 equity crowdfunding platforms account for the vast majority of activity on these kinds of sites with 6 of these platforms raising over $20 million each for 343 companies raising money on their sites
    • Investors recognize the potential in equity crowdfunding and want to invest in the leading companies in the space -- the top 10 equity crowdfunding platforms raised $100 million in investments themselves to fund their own operations

    Equity crowdfunding is growing very quickly and the top platforms are taking the vast majority of the share. Sites like AngelList, OurCrowd, CircleUp, and FundersClub are seeing a lot of interest from investors looking for access to top private deals and top startups are migrating to these platforms to access thousands of angel investors.

    2015 looks even better for the industry.

    Check out the 2014 equity crowdfunding infographic here