The Exciting Expansion Of Crowdfunding Favors Equity, Real Estate, Locavesting, And More

Photo courtesy of James Cridland via Flickr, modified by Curiousmatic. 

Crowdfunding, the method by which projects, goals, and companies are funded via a pool of backers, has grown 1000% in the last five years.

That growth isn’t about to slow down, either. In fact, an infographic by crowdfunding platform Fundable shows that it’s expected to grow 94% more in 2014, adding at least 270,000 jobs and injecting more than $65 billion into the global economy by the end of the year.

This is in part due to some key expansions and changes in crowdfunding trends that we’re already beginning to see take form.

Equity crowdfunding

Traditional crowdfunding platforms work when backers donate money, often using reward-based systems. Equity crowdfunding, on the other hand, rewards donations with a percentage of ownership.

As of the SEC’s most recent crowdfunding rules, entrepreneurs can attract both accredited and unaccredited investors to publicly raise capital from anyone interested in having a share of the company.

Real estate crowdfunding

Real estate crowdfunding recently became the fastest growing segment of the crowdfunding market, according to TechCrunch, with company RealtyMogul having become the largest online marketplace for real estate investing in their first year of existence.

This type of crowdfunding makes real estate investments more accessible to accredited investors, who can earn passive income on their investments as soon as the following month or quarter.

Peer-to-peer lending and “locavesting”

While debt-based crowdfunding takes a backseat to the limelight enjoyed by equity and reward-based platforms, recent data shows that as much as 79% of venture capital firms invest in loan-based crowdfunding sites.

This type of crowdfunding allows for companies or startups to receive loans in return for interest. The term “locavesting” specifically refers to crowdfunded loans to local enterprises and businesses as a form of community strengthening.

Niche platforms

Lastly, as the amount of crowdfunding websites exceeds 500, we are already seeing differentiation in industry and sector type that’s vital to success in all areas. This allows for niche platforms that cater to people’s donation interests.

This means that we will likely see more and more specific crowdfunding platforms crop up that suit the tastes of potential investors/donors. Already, there are sites devoted to game developers, mobile apps, health, charity, creative projects, and even one that funds poor recent college graduates.

Are you excited about the future of crowdfunding, or have a crowdfunding niche that you like to involve yourself in?  Tweet us @curiousmatic. 

Jennifer Markert