Five market trends in crowdfunding for development

As we have previously written about, there are lots of potential opportunities in using crowdfunding to support and fund projects in developing economies.

Until recently the majority of discussions and studies on crowdfunding for development have been centered around individual programmes and projects, with little research and insights on the size and dynamics within the market as a whole.

However, as the market for crowdfunding for development continues to grow, platforms are generating increasing amounts of data on loans, donations and investments made, both in terms of the transactions within developing economy markets, as well as crowdfunding campaigns channeling funds from developed to developing nations.

We teamed up with Lars Kroijer from AlliedCrowds, a data and analytics firm who aim to be the leader in information on development world crowdfunding, to explore what their data can tell us about the trends and dynamics within the crowdfunding for development market.

1. In 2015, $430 million worth of projects in developing economies were funded through crowdfunding

In 2015, Allied Crowds estimate that projects in the developing world (excluding china) raised $430 million via crowdfunding. Allied Crowds forecast that in 2016 this will increase to to $660 million, representing 53 percent growth over the previous year.

2. Donation and lending are the most popular models for developing economy projects

Donation and lending-based models dominate the developing world crowdfunding landscape, representing 43% and 38% respectively of the total amount raised in 2015. This makes up 81% of the total market. It’s important to mention that much of the lending activity comes through platforms like Kiva, which charges no interest on the loans. Equity-based crowdfunding is third most popular model with 11% share of the market, followed by rewards-based campaigns (7%).

3. Asia is the most active continent and most funding was raised in India.

According to Allied Crowds data, the most active continents in terms of funds raised via crowdfunding is Asia, followed by the Americas and Africa. In 2016, Allied Crowds predict Asia will raise just under $240m, the Americas to raise over $211m, and Africa to lag slightly behind at $186m.

The countries that raised the most money in 2015 were: India ($27.8m), the Philippines ($26.9m), Nepal ($25.5m), Mexico ($24.8m), and Kenya ($19.9m). All of these countries — with the exception of Nepal — have budding crowdfunding ecosystems and could become leaders in their regions. Nepal’s high total represents the outpouring of support the country received in the aftermath of the April 2015 Earthquake and its aftershocks.

4. The most popular sector is housing

Sadly, some of the biggest crowdfunding campaigns in the developing world went to the reconstruction efforts following the Nepal earthquake. The Global Giving Relief and Recovery Fund, for example, raised over $5 million on its own. Syrian refugees and migrants also benefited from campaigns raising money for housing and shelter. One of the most prominent efforts for that cause was led by Kickstarter, which raised over $1.75m for the refugees - the platform’s first non-profit campaign. In total, Allied Crowds estimate housing campaigns to have raised $42.6m; health campaigns were very close behind, having raised $42.5m. Agriculture (also $42.5m), women and girls ($32.1m), and arts and culture ($31.4m) rounded out the top five categories.

5. Little activity in small states and Yemen

The countries that crowdfund the least are small states with low internet penetration rates, like Djibouti and the Solomon Islands. One country that doesn’t fit this profile, however, is Yemen. The Middle East’s sole Least Developed Nation by World Bank classification boasts roughly the same number of internet users as Portugal (just under 7 million), and is more populous than Australia. Despite this, Allied Crowd estimates show that crowdfunding activity in Yemen raised under $100,000 in 2015. This is quite puzzling, and it would be great to see more campaigns to benefit the Yemeni people take off in 2016.

If you are interested in finding out more about what can be learned from the AlliedCrowds data, have a look at their (free!) monthly reports on crowdfunding for development.

- See more at: http://www.nesta.org.uk/blog/five-market-trends-crowdfunding-development?utm_source=Nesta+Weekly+Newsletter&utm_campaign=193d95bd9b-Nesta_Newsletter_27_4_164_21_2016&utm_medium=email&utm_term=0_d17364114d-193d95bd9b-180644105#sthash.fxHqkUKN.dpuf