Research firm Massolutions came out with a crowdfunding industry report based on Research Form 582. It said that crowdfunding sites globally will reach close to $5.1 billion in transactions for 2013, double from $2.7 billion in 2012. That is an 81% growth in 2012 versus a 64% growth in 2011.
Interestingly enough, LendingClub offers peer-to-peer loans of up to $33,000 and last month transacted $125 million with a projection to lend up to $1.5 billion by year end. The industry behemoth of crowdfund lending is triple the size of second place firm in the US, Prosper, which has lent $400 million over the last few years.
“While the growth in 2012 funding volumes was primarily driven by both lending-based and donation-based crowdfunding, lending grew a compelling 111% to a total volume of $1.2 billion, and is expected to exceed $2 billion this year,” said Carl Esposti, CEO of Massolution. He adds: “The growth in lending volumes mainly stems from crowdfunded micro-loans and from local SME loans.”
The report concludes that lending-based crowdfunding has grown more quickly than other types of crowdfunding. When we combine LendingClub’s $1.5 billion trajectory in 2013 with Kickstarter’s 2012 $274 million revenue (the leading reward-based firm in the world had 230% growth in 2012) we could see these two firms exceeding $2 billion in transactions.
The report estimates that in 2013, 72% of crowdfunding will stem from the US, 26% from Europe and 2% from the rest of the world. The US is clearly a leader in this space.
These are numbers that Bruce Lipnick, CEO and founder of Asset Alliance, foresaw and for this reason he announced last week that he was entering the marketplace on a global scale through his investment in CrowdAllianceUSA.com. Bruce Lipnick, one of the pioneers in the Alternative Wealth Management and the Mutual Fund industry, currently manages and allocates capital with value in the order of $1.6 billion. He announced his entry during his speech on the 1 year anniversary of the JOBS Act last April 5, 2013 at The Soho Loft Innovative Investing Symposium crowdfunding event in Boston at Thomson Reuters. Bruce maintains that, “Our mission is not only to be one of the premier companies utilizing its international contacts but to focus its effort to help the crowdfunders have a profitable liquidity event through new and traditional avenues.”
In December 2012 the article “Crowdfunding Will Make 2013 The Year Of The Gold Rush,” estimated that the industry would reach $3 billion in 2012 and potentially $6 billion in 2013. Maybe LendingClub and Kickstarter will push the numbers closer to this estimate versus the Massolutions report. Next year’s report will tell. The report 2013 can be found here.
The crowdfunding industry has arrived and leading financial firms like Asset Alliance are embracing it. More are considering it.
By David Drake, founder and chairman of LDJ Capital, a New York City private-equity firm, and of The Soho Loft, a global financial media company with 3 divisions in Publishing, Conferences & Expos and Consulting. For more updates on the crowdfunding industry and information on alternative investment events, or if you have comments about this article, you can comment here or reach out to me at David@LDJCapital.com directly. Thank you.
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