Market Trends of Crowdfunding Industry
Reward-Based Crowdfunding is Anticipated to Augment the Growth of the Market
- Reward-based crowdfunding occurs when a firm (often a start-up) seeks pre-seed and seed money via an online platform and provides investors with a gift or "perk" in exchange for their financial contribution. Pre-sales are transactions in which people, initiatives, or businesses raise funds from bankers in exchange for a non-monetary incentive. It allows organizations to interact and build on an existing network and solicit that can be used. This type of crowdsourcing is typically appropriate for early-stage businesses or specialized projects.
- The pandemic resulted in increased contributions and reward-based crowdfunding incidents targeted at assisting those impacted by the worldwide pandemic. The number of COVID-19 reward-based crowdfunding campaigns created by various persons (including citizens, commercial organizations, foundations, charities, and trusts) throughout the European continent increased significantly.
- According to Indiegogo, Inc., hardware and technology crowdfunding is expected to gain popularity in Japan. Last year, Indieogo collaborated with small and large campaigners to assist entrepreneurial brands in reaching new audiences and testing small batches of new goods.
- According to Forbes Japan, Japanese entrepreneurs raised almost USD 7,000 million last year, expected to rise to USD 10,000 million annually in a few years.
- Reward-based crowdfunding, which does not include making an investment in or a loan to a company, carries inherent risks. It soon advanced from giving supporters a token of thanks for their support of a cause or an appeal. In many instances, it has transformed into a sales channel where the gift is the product bought with the contribution, thereby giving the gift's price in return.
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Europe is Expected to Hold Significant Share
- The European crowdfunding share of the market and growth is likely to increase as more governments in the area organize rules for the crowdfunding model. The European Union nations are also allegedly going to establish laws to allow crowdfunding sites in the region to operate across other EU regions.
- Different crowdfunding platforms in Germany give novice and experienced investors access to private investment opportunities. German crowdsourcing sites are among the most well-regulated and adhere to best practices. German crowdfunding websites provide choices for investment in SME and real estate and let users accumulate wealth.
- In Germany, there are 112 platforms dedicated to P2P lending, equity, debt, donations, rewards, and mini-bonds, according to thecrowdspace.com. Retail and accredited investors can invest through them in several company sectors, including logistics, real estate, green energy, startups, personal loans, art, small and medium-sized enterprises (SMEs), health & science, social causes, education, farming, sport, and maritime. Additionally, Germany has 25 sites for equity crowdsourcing. They provide various investment possibilities for retail and accredited investors, emphasizing real estate, green energy, startups, art, SME, health & science, social causes, education, or farming. The minimum investment amount varies from platform to platform depending on the sector or specific platform objectives.
- The European crowdfunding market has recently made tremendous strides. Technology advancements and increasing proptech businesses in Europe have created new crowdfunding opportunities in real estate, banking, and other industries.
- For instance, In April this year, Heura's second Equity for Good Rebels crowdfunding campaign raised almost USD 4.22 million in just 12 hours, cementing its reputation as Europe's fastest-growing plant-based firm. The Crowdcube campaign saw 4,500 investors from all over Europe join the Good Rebel community, which is on a mission to speed the protein transition.
- Germany is a key market for crowdfunding, as evidenced by the several foreign platforms aggressively courting German investors or trying to extend their operations there. However, until recently, Germany's regulatory climate for private crowdfunding enterprises could have been better. One of the main barriers to cross-border service provision was the absence of unified law, so when the EU regulation on Crowdfunding Service Providers (ECSPR) was created, it initially seemed that Germany would need help to implement it as easily as other EU nations. As a result, on June 2021, the German Parliament passed a bill into national legislation that implements the EU regulation on Crowdfunding Service Providers.
- Even though the local level of the German crowdfunding regulation has some shortcomings, it is anticipated that the robust German FinTech industry, in general, and crowdfunding, in particular, will not be negatively impacted by the new rule, and the German crowdfunding platforms will witness a steady rise in the study period.
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