UK and US Competing for Crowdfunding Leader Titles
By Irene Tordera, Last week it was announced that London is the world’s crowdfunding capital, based on some recent statistics published by a crowdfunding research institute, which showed that the British capital was the city with the highest number of crowdfunding campaigns launched per day. The announcement comes as little surprise, considering that the incredible growth of crowdfunding in the UK was already in the air. A very open mindset with regards to innovation and technology, on the one hand, and a prompt answer from the local authorities – that reacted to the growing phenomenon putting in place a regulation -, on the other hand, allowed British crowdfunding to flourish at very fast pace.
The numbers are probably driven upwards by securities crowdfunding, which, thanks to the above mentioned regulation, is proving to be a valid method of raising equity or debt capital for private companies and an appealing alternative way of investing for British savers. London is no doubt the crowdfunding capital of the UK, with 50% of the total deals coming from its urban area. But is it really the crowdfunding capital of the world? What about other centers of excellence in the US or in the world?
If London is the world’s capital of crowdfunding, the US is the leading nation globally: in fact, according to the same statistics, the US still hosts the largest crowdfunding platforms and it is the leader in terms of total capital raised, with almost £135 million in the second quarter of 2014. However no city predominates, leaving to the British capital the primacy.
It is not surprising that it is these two countries that are competing for leading positions in crowdfunding: the phenomenon developed at almost the same pace in both markets and they are both characterized by a culture that is strongly oriented towards entrepreneurship and with a fairly high risk appetite. The two countries also host one of the main early stage finance markets in the world, with a well developed VCs and Business Angels scene, which recently showed an increasing interest in this financial innovation.
Crowdfunding is often said to disrupt the traditional financial services market, adding an alternative to existing early stage finance sources. It would be good to see, in a few years from now, that this new financial mechanism has also been able to liven up the dormant early stage financing scene of some countries that usually lag behind compared to the US and the UK, allowing them to compete for a title of crowdfunding leader. This is how crowdfunding would unleash its full disruptive potential, revolutionizing the early stage capital market worldwide. We are confident it is just a matter of time.
ReferencesHesse, J. (2014). London Is Now The World’s Crowdfunding Capital. Forbes.
Moules, J. (2014). London Emerging as World Leader in Crowdfunding. FT.com
Born and raised in Milan, Italy, Irene is an International Business graduate, with a strong interest for innovative ideas that can simplify our lives.
During her studies, she co-founded an online community for sportspeople and worked in marketing positions at Ogilvy & Mather Advertising and at the European Business Angel Network, in Brussels. She is a passionate blogger about crowdfunding and the startup ecosystem.