Crowd finance has quickly grown into a major industry and is funding millions of individuals, businesses and charitable endeavours. There are many questions about the type of financing this market is providing and using 2015 as a reference year, we wanted to explore this through a series of insights illustrating different funding amounts. This is the first of four and focuses on raises under USD 50k.
When looking at the distribution of 1.2M individual raises of $0-50k from 483 marketplaces around the world (see chart below), it is evident that smaller amounts of funding are requested far more often than larger amounts. Raises of $0-5k account for 55% of the total, with raises between $5-10k and $10-15k accounting for 18% and 11% respectively.
Marketplace (p2p) lending was the dominant funding type within this range in 2015, accounting for 70.8% of all raises by number. Equity fundraising, by contrast, accounts for only 0.03% of the total. The "other" category (which represents funding types such as micro-loans, bonds and invoice trading), was the second largest type of financing, accounting for 14.3% by number.
In contrast to the count of individual fundraises, the total amount of financing raised within $5-10k and $10-15k exceeded the total of the sub $5k raises. Given how heavily the raise count is skewed towards those under $5k, this is surprising. The reason is that the average raise under $5k is $1.4k, towards the lower end of the segment, whereas it is closer to the upper limit for the next two segments ($7.8k and $12.7k respectively).
The chart below also emphasises an increase in total raised in the $30-35k range. This increase reflects the $35k limit on loan size offered by the largest marketplace lenders in the US. The high average raise of $33.8k within this segment indicates that many raises come close to this limit.
Loans dominates the contribution by total raised, accounting for 86.5% of all funding. Compared with count, micro-loans, invoice trading and bonds (categorised by 'other') account for less, with 3.5% of all funding.