With Kickstarter reporting a 35% drop in listed campaigns in April 2020, against the same month last year, it’s clear the crowdfunding industry (like many others) has been significantly impacted by the current situation.
But will reduction in the number of live campaigns lead to fewer start-ups securing the funding they need?
I spoke with Hannah Forbes, founder of The Funding Crowd, an alternative funding consultancy for start-ups and scale-ups.
“There is definitely a decline, but there’s not as big a decline as I was expecting. So I think from my perspective, looking at campaigns and seeing the marketing that they’re doing around their campaigns, campaigns that are well planned and well-executed are still doing well. They’re still hitting their targets, but they might not be getting as much funding as they probably would have if they weren’t raising in this climate.”
Does this indicate a shift back towards more traditional VC and angel investment? Not likely.
Crowdfunding emerged from the 2008 financial crisis, and Hannah predicts the challenging economic circumstances yet to come will cause a drop in traditional funding and an increase in crowdfunding:
“There’s definitely been a shift in the industry and interestingly, crowdfunding emerged from the 2008 crisis. So I think there will be a boom after this, because it’s going to be more difficult to take on debt. It’s going to be more difficult, I think, to get VC and angel funding. So I think crowdfunding will recover, but at the moment, I think the platforms are struggling to get as many people launching.”
Listen to the full podcast for more on equity and rewards-based crowdfunding, including:
- The expected rates of success for rewards-based funding campaigns
- The traction indicators Hannah looks for when deciding whether start-ups are ready for equity-based crowdfunding.
- How established brands are using rewards-based crowdfunding to bring their new products to market.
- The essential steps and timeframe for a successful crowdfunding campaign.
- How the documentation needed varies for an equity vs rewards-based campaign.
Download my new expert guide: NO-STRESS SCALING: HOW TO GO FROM PRE-SEED FUNDING TO ‘SERIES A’ AND BEYOND