Perspectives on Crowdfunding

Crowdfunding, a new concept that has already made its way to several countries, is still in an emerging phase in Europe. But what is crowdfunding? How does the industry perform on a global level, in Europe and in Belgium? And how will crowdfunding develop in the future?

Crowdfunding is defined by the Oxford Dictionary as funding a project by raising limited monetary contributions from a large number of people. Many examples of crowdfunding can be found in history. In the 1300s, for example, funds were raised in Europe from the general public to build cathedrals (as well as other charitable projects). Another notorious example occurred in 1885 in the USA with the construction of the Statue of Liberty. Some $100.000, which amount to $2,5 million in today’s dollars, were needed to complete the project. The call for funds was launched in a newspaper and could count on an overwhelming response. The campaign was successfully completed, raising more money than needed.

Today, in this era of digitalization, people are able to connect with each other in a much faster fashion thanks to the internet. This allowed the concept of crowdfunding to become much more accessible and as such to grow exponentially. An important evolution is the equity-based aspect of crowdfunding, thanks to which startups and SME’s are able to find capital and view crowdfunding as a complementary or alternative financing method. 

As mentioned above, the industry of crowdfunding is in full expansion. A crowdfunding report by Massolution (2015) predicts that the global crowdfunding market will reach $34,4 billion in 2015. This is more than double the amount compared to the year before, when the market size amounted to a total of about $16,2 billion. In Belgium over €2 million was raised in 2014 (cfr. graph 1). 

The estimated growth in Belgium is also very promising. A report by KMPG predicts that the market will increase by more than 50% in 2016. Although these numbers are very impressive, Belgium has a long way to go compared to other countries. Hence, big opportunities are created the players who are currently present in the market. 

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