Freitag, 8. März 2013

Sentiment in Europe

Sentiment on Crowdfunding in Europe

by  David Drake

Recently I was honored to present on crowdfunding in the center of Istanbul during EBANs annual Winter University event. The few days with the leading angel networks of Europe showed me that there was interest in crowdfunding in the EU but not the embracing of it that we see in the US.

Germany, UK, Holland and France are leading in crowdfunding acceptance and growth while the rest of Europe is looking at it with disinterested at worst and curiosity at best. I see a parallel here with how websites were viewed by business in the early 90s.

Remember that with web sites early on everybody rebuffed the Internet and over the years more and more had the courage that we see lacking today to face their personal demons. Slowly people’s fears of stupidity when looking at a website dissipated and by the millenium having a website was a standard expectation for companies. Crowdfunding is going through exactly the same growing pains in Europe (as well as in the rest of the world).

However, the fact remains that crowdfunding is a permanent tool available for all economic ecosystems in the world to efficiently share and match opportunities. Former Treasury Secretary Lawrence Summers and former CEO of Morgan Stanley John Mack joined the debt crowdfunding firm LendingClub in the US last year. Lending Club did $75 million in personal peer­to­peer loans in November, $105 million in January 2013 and will break $125 million in February 2013. LendingClub’s share will represent $1.5 billion out of the $6 billion estimated market we wrote about for Forbes last month.

There are 35 other debt focused crowdfunding firms worthy of notice and hundreds of crowdfunding firms focused on donations such as Give2Gether (Israel); rewards like Fundable, RocketHub and equity like SeedInvest (US), CrowdValley (Hong Kong and Finland), Symbid (Holland), Seeders and CrowdCube (UK).

The world’s largest reward based crowdfunding firm Kickstarter is targeting expansion in the UK while the runner up Indiegogo already has expanded into Germany and several other nations. Individuals from 177 nations donated $606.25 per minute on Kickstarter in 2012 to raise a total of $274 million. The largest category in terms of contributions was gaming products which received $84 million in 2012 on the Kickstarter platform.

Combine Kickstarter with LendingClub and factor in the growth rate of each and you will see that those two firms will produce $2 billion in crowdfunding. That’s just two firms alone.

This is a financial revolution. will show you 20+ campaigns that raised over $1 million each in the 2012 calendar year. A word of moderation this tool is not for everyone. For example, it is not for Eastern Europe and eco systems that are closely guarded.

Bear in mind that the fierce and acidic push back by US angels in the US early 2012 succumbed to a phenomena that is now realized ­ a reality that is here to stay. Resistance is futile. Crowdfunding has already arrived and entrepreneurs can embrace it as an inexpensive tool for ecosystems to share information and generate startup capital or passively continue to view it with disinterest. We recommend the former.

David Drake of The Soho Loft and principal of the private equity firm LDJ Capital speaks and writes for magazines like Forbes and peHUB on the topic of global and macro economic financial innovation and policies. His media company The Soho Loft researches and consults ecosystems on how to apply efficient communication and opportunities in an age of social media revolution.

At first published and Copyright 2013: The Soho Loft