Your Guide to Understanding Crowdfunding

Summary

The video script delves into the rapidly expanding online crowdfunding industry, which raised $16.2 billion in 2015 and is projected to reach $96 billion by 2025. It outlines four primary crowdfunding models: debt-based, equity-based, reward-based, and donation-based, each with distinct examples. The script advises on evaluating crowdfunding platforms by their growth stages, focusing on customer traction in the early stage, revenue model validation in the growth stage, and profitability maximization in the late stage. Key valuation metrics for each stage are provided, guiding potential investors.

Takeaways

• 💹 **Crowdfunding Growth**: The crowdfunding industry raised $16.2 billion in 2015 and is projected to grow to $96 billion by 2025.
• 🌐 **Global Funding**: Crowdfunding allows individuals and startups to gain funding for projects from contributors worldwide.
• 💼 **Four Types of Crowdfunding**: There are debt-based, equity-based, reward-based, and donation-based crowdfunding platforms.
• 📈 **Debt-Based Platforms**: Contributors receive interest payments, e.g., FundedHere, Crowdo, Moola Sense.
• 🔖 **Equity-Based Platforms**: Contributors receive shares, e.g., AngelList, FundersClub, CapBridge.
• 🎁 **Reward-Based Platforms**: Contributors receive rewards like early access to products, e.g., Kickstarter, Indiegogo, Ulily.
• ❤️ **Donation-Based Platforms**: Donations are charitable and often tax-deductible, e.g., Indiegogo, Patreon, YouCaring, FriendFund.
• 🚀 **Investment Considerations**: Before investing, consider the platform's growth stage and focus on customer traction in the early stage.
• 📊 **Valuation Metrics**: Key metrics vary by stage: early stage focuses on campaigns and funds raised, growth stage on funding value and revenue, and late stage on profitability and cash flow.
• 💡 **Further Learning**: For more information on crowdfunding, visit sgxacademy.com or download the digital research paper at sgx.com/digital-sector.

Q & A

What is crowdfunding?

Crowdfunding is a method where individuals or startups use an online platform to raise funds for a project from a global audience.

How much did the crowdfunding industry raise in 2015, and what is the projected growth by 2025?

The crowdfunding industry raised 16.2 billion US dollars in 2015 and is projected to grow to 96 billion by 2025.

What are the four types of crowdfunding sites mentioned in the script?

The four types of crowdfunding sites are debt-based, equity-based, reward-based, and donation-based platforms.

What do contributors receive on debt-based crowdfunding sites?

On debt-based crowdfunding sites, contributors receive interest payments in exchange for their contributions.

What are some examples of equity-based crowdfunding platforms?

Examples of equity-based crowdfunding platforms include Angel List, FundersClub, and CapBridge.

How do reward-based crowdfunding platforms operate?

Reward-based crowdfunding platforms operate by promising contributors rewards, such as first priority access to a product once it goes live, in exchange for their support.

What is the nature of contributions on donation-based crowdfunding platforms?

Contributions on donation-based crowdfunding platforms are charitable and usually tax-deductible.

What are the key valuation metrics for crowdfunding platforms in the early stage of growth?

In the early stage of growth, key valuation metrics for crowdfunding platforms include valuation divided by the number of campaigns, valuation divided by successful campaigns, and valuation by funds raised.

What is the aim for crowdfunding platforms in the growth stage?

In the growth stage, the aim for crowdfunding platforms is to prove the revenue model and scale up as rapidly as possible.

What are the key valuation metrics for crowdfunding platforms in the late stage?

In the late stage, key valuation metrics include valuation divided by revenue, valuation divided by EBITDA, and the P/E ratio.

Where can one learn more about crowdfunding and access a digital research paper on the topic?

To learn more about crowdfunding and access a digital research paper, one can visit sgxacademy.com or download the paper at sgx.com under the digital sector.