It's been quite a year for crowd finance!
2016 was another strong, and extremely active year for the crowd finance industry, with continued growth and maturation of the market on a global scale. Investment continued to flow into platforms and deal opportunities, and new crowd finance platforms were created and launched in significant numbers. However, this year wasn't just another phenomenal year for crowd finance, but also saw continued support for fintech in general, which sustained 2015's trend of strong investment.
As an organisation which tracks and analyses crowd finance activity in detail, Crowdsurfer has a ring-side seat and a unique view of developments in the sector. With such a detailed and privileged insight into the ever-expanding world of crowd finance, here is my roundup of the key developments of 2016:
A multi-billion dollar industry
In the last 12 months, our data analytics service, Crowdsurfer Pro, tracked $22B in pledges to over 3M campaigns across the crowdfunding markets. That is an average of 250k entities or individuals receiving $1.83b between them each month!
The number of platforms continues its rise
The number of crowd finance platforms across all forms (broadly grouped as equity, debt, rewards or charitable donations) has continued to increase in 2016. Over the last year, we have tracked the formation of an average of one new crowd finance platform a day worldwide. This time last year, we felt that the pace of formation was set to cool a little, but actually, the pace has remained upbeat: confidence in fintech, access to technology and investment into services remain high, and barriers to market entry relatively low.
It's been all about collaboration and growth
2016 saw platforms forging partnerships with other financial and non-financial organisations. This was more notable than the previous year - another sign of a maturing industry. These partners included banks, educational institutions, and other platforms. UK-based examples from 2016 include Rocket Fund, which is linked to innovation foundation NESTA, and Octopus Choice, which is connected to Octopus Investments.
2016 also proved to be a bumper year for platforms seeking to raise investment themselves (some using platforms, some not). Amongst the many who successfully sourced capital were India's Rupaiya Exchange, Spain's ECrowd, and Peer Street in the US. The raises underline the continuing momentum behind, and confidence in, technology-led financial markets.
The regulators are getting more active
Regulators around the world increased their oversight of the regulated portions of crowd finance in 2016 (broadly debt and equity). In the US, the SEC introduced the final parts of regulation allowing equity crowd finance in USA, and, following scandals such as Ezubao, Chinese authorities took action against malpractice amongst Chinese platforms.
The need for further oversight was underlined by some notable damaging incidents, which had a negative impact on the public reputation of crowdfunding as a whole. These included the firing of Lending Club CEO Renaud Laplanche over faulty loans, and the bankruptcy of Swedish P2P lender, Trust Buddy.
Such events, and the concern they cause amongst the general public, show that the industry still has a way to go to ensure all services are fair, reliable, and compliant. Without this, and the transparency we see as a priority, the industry is unlikely to be able to establish itself as a reliable alternative to traditional finance.
And finally, closer to home...
On a more personal note, this year has been a big one for Crowdsurfer, with a growing team and board, exciting product developments and further investment of over £1m in our latest funding round.
We took our monitoring and analytics capabilities to a new level with the launch of Crowdsurfer Pro, a new data analytics dashboard tailored to parties looking to raise funds, track the market or invest. As 2016 drew to a close, we launched Daisy, a ground-breaking machine intelligence service designed to help you delve deeper than ever before into our crowd finance intelligence.
With all that we have achieved this year, the next 12 months look set to be even more exciting. Here's to 2017!