One of the questions that bounces around Crowdsurfer's offices is "How do we define the crowd finance industry we're supporting?"
It sounds like it should be very straightforward, but actually there are a few grey areas in what is a very high-growth, evolving, global industry. The applications of web technology to directly connect people financially are various and are evolving quickly. So what characterises the burgeoning crowd finance industry distinctly from everything else?
Our data team discovers and explores all kinds of online collective finance websites, from specialist services for innovative startups, creative projects, charitable endeavours, services for specific verticals such as legal case or natural resources investment, and many flavours of business or individual loan services. The types of finance they offer extend beyond just equity and debt, to microloans, debentures, rewards, donations, revenue-sharing, bonds, invoice trading (the list goes on). They're all connecting people financially in a marketplace, so all those we include under our crowd finance umbrella.
But there are plenty of other digital financing mechanisms. For example a charitable donation option at an online checkout (that's the digital equivalent of the collection box sitting next to the till for your spare change). So it's still a group of people contributing to a specific cause, but it's not time bound, and it's contingent on a purchase. It's more of a steady trickle than a marketplace.
Another example is loans websites that offer loans to a 'crowd' but don't offer the crowd the investment opportunity on the other side. So it's more like a traditional loans service with a different kind of website on the front.
So we've come up with some criteria by which we define crowdfunding, to help distinguish these grey areas:
Crowd finance platforms bring together a "crowd" on both sides of the transaction.
Participation is accessible to the public (noting that suitability qualifications may apply).
Platforms originate projects (i.e. we don’t include aggregators as this would lead to double counting).
Transactions are online (not a website advertising offline transactions).
Contributing to a campaign/loan is not conditional on a purchase, or similar requirement, it is itself the purchase.
A project (including loans) must have a numerical goal.
To double check our reasoning, we also apply our ‘parent rule': did this service or technology exist in our parents' time? If not, it's probably part of this new movement.
Following this definition, we've mapped a world of over 1700 platforms globally (largely excluding China), and there are new launches and discoveries every week. When we look at the data we collate, it tells a story of very fast-paced fintech innovation, connecting fundraisers and funders around the planet, which has been quietly gaining momentum for a few years. We anticipate much more of it yet to come.