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Equity CrowdFunding Report: October 2016

November 01, 2016

After 2 months of lackluster funding, equity crowdfunding has seemingly rebounded in October with an influx of capital this month. So, what’s the driving force behind the new capital surge?

Equity-crowdfunding-report-october-2016.png

 

The 30% Rule

Data from Seedrs, a leading equity crowdfunding platform in the UK, observed that once a campaign hits their 30% funding mark, the success rate of that campaigns increases to 90%.

After looking through the past 6 months of data, we’ve noticed funding has started to accelerate for startups who have opened their funding rounds in the past 2 months. One third of all Regulation Crowdfunding campaigns have started within the past 60 days, and of those companies 40% have already hit their funding goals, with nearly 75% hitting the magical funding mark set by Seedrs.*

*Data sourced by nextgencrowdfunding.com and platforms offering Reg CF.

 

50/50 Odds

Crowdrating.co.uk released data earlier this year that pulled statistics from 678 campaigns listed on the top 12 crowdfunding platforms in the UK. The data revealed that 55% of equity crowdfunding campaigns saw success, while others failed to hit their goals.

While it’s still too early to tell what will become of equity crowdfunding in the United States in year one, only 14 businesses have failed to meet their minimum investments. Of the other campaigns, only 38% have reached their minimum goals.*

*Data sourced by nextgencrowdfunding.com and platforms offering Reg CF.

 

Outlook

With minimum funding goals being met at a faster rate, I’m left with two possible conclusions. The first possible explanation is that equity crowdfunding is gaining in popularity. With 38% of businesses hitting their funding goals, early adopters are starting to spread the word about this new investment opportunity. On the other hand, you could say that startups and funding portals are getting smarter with how they raise capital. If both parties see the importance of the 30% rule, businesses could be securing a sizeable amount of funding before they go live to the general public. As popularity around the equity funding space increases with more and more deals getting funded, there may be validation behind our prediction for 2017.

 

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