With few exceptions, government response to the COVID-19 pandemic came under severe criticism from the private sector. But where government intervention failed to deliver, crowdfunding services found ample opportunity.
The sad reality of the pandemic led to as much misery as it did to unprecedented levels of solidarity in the form of crowdfunded relief efforts. As a result, the crowdfunding industry became an unlikely hero and is now reaping the rewards.
A recent market report by Technavio expects the crowdfunding space to grow by $196.36 billion between 2021 and 2025. With a 13.85% year-over-year growth in 2021, the industry is slated to expand at a CAGR of over 15% in the next four years.
Crowdfunding is growing at such a steady rate that many regulatory bodies are taking note. The EU published the European Crowdfunding Service Providers Regulation lending even more credibility to the services.
Despite the clear boost from pandemic altruism, it would be a disservice to say that crowdfunding as a business model is only successful because of it. The key benefit of crowdfunding platforms to many new entrants in any business space is low-cost exposure for their products and initiatives through the viral nature of crowdfunding efforts.
The same report from Technavio pointed out that the Asia-Pacific region will be responsible for 62% of the growth in crowdfunding transactions.
It’s no surprise that many smaller and newer entrants to various markets are choosing crowdfunding instead of traditional funding efforts. Crowdfunding offers much easier access to capital and acts as a low-risk testing ground for unproven brands and products.
All signs point to crowdfunding becoming one of the hottest industries to look out for in the coming years.