Deloitte predicts that crowdfunding portals will raise $3 billion in 2013, double the $1.5 billion raised in 2011.
Crowdfunding portals are websites that enable large numbers of individuals to financially support a project or company, with each backer contributing just a small percentage (generally less than one percent) of the total funding. A typical crowdfunded project has thousands of backers.
Crowdfunding’s growth matters to TMT for two reasons. First, some crowdfunded projects raise funds for new technological devices and media content such as computer games. Second, the portals themselves are likely to become a new type of Internet portal.
Media coverage of crowdfunding tends to focus on its role as an alternative to traditional venture capital (VC); however, there is much more to the concept. In fact, there are four distinct categories of crowdfunding that vary by type of portal and capital raised.