Loan, reward, donatiopn-based crowdfunding booms

Apr 8, 2013, 6:41am PDT Updated: Apr 8, 2013, 9:02am PDT

Loan, reward, donation-based crowdfunding booms

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Massolution

The biggest global crowdfunding category in 2013 was social causes, attracting more than 27 percent of the money raised, according to a new report from Massolution.

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Cromwell Schubarth

Senior Technology Reporter- Silicon Valley Business Journal

Email | Twitter | Google+

Crowdfunding based on loans, rewards and causes boomed last year, driving a near doubling of group fundraising by businesses and nonprofits in 2012.
But growth in equity-based fundraising lagged far behind that pace, awaiting action by the U.S. Securities and Exchange Commission on the JOBS Act a year after it was signed into law.
That is what the data shows in a report from Massolution, a firm that advises and helps promote crowd funding. The report drew from data on 308 active crowdfunding platforms around the world.
It showed that all kinds of crowdfunding lumped together grew by 81 percent to $2.7 billion in 2012, with more than 1 million successful campaigns. Massolution predicts that the total raised will soar again in 2013, hitting $5.1 billion and that equity-based crowdfunding will finally start in the U.S. by year's end.
“While lending-, donation-, and reward-based crowdfunding have thus far been leading this global financial revolution, equity-based crowdfunding is about to take center stage in the U.S.,” Massolution chief executive Carl Esposti said in a prepared statement.
Until now only wealthy investors have been allowed to invest in new businesses in exchange for equity in the startups. The JOBS Act is aimed at opening that up to rank and file investors but the SEC is working out the details of what that means.
Massolution said it expects equity-based crowdfunding will hit $166 million in 2013, up from $116 million in 2012.
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Cromwell Schubarth is the Senior Technology Reporter at the Business Journal. His phone number is 408.299.1823.

Industries:

Banking & Financial Services, Technology

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