New Data Released by the Crowdfund Professional Association (CfPA) Shows Surprising Results
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“What may surprise many people is the level of interest in crowdfunding from not only entrepreneurs but also average Americans eager to invest in their communities,” states Sherwood Neiss, Co-Founder of the CfPA and Principal of Crowdfund Capital Advisors, a crowdfund investment consultancy, working with global governments, crowdfunding industry professionals, and investors throughout the world.
The survey interviewed 442 respondents (287 entrepreneurs, 166 investors, 179 intermediaries and 11 unspecified). The most surprising results came from investors. The bulk of investors who responded (71%) were unaccredited and reported they would be investing an average of 4,347/year. Accredited investors stated they would deploy $29,987/year. When investors were asked what the biggest driver for investment was, while, as expected, returns topped the list (33%), helping businesses gain access to capital (20%), being part of something greater than myself (20%), and the ability to make a difference in the life of an entrepreneur (17%) were just as important.
According to the SBA entrepreneurs currently only have access to 1% of total investment capital in the U.S. but create 50% of the jobs. An increase in funding could mean a boon for the economy.
While investment interest results were encouraging, the data showed confusion about how equity-based crowdfunding platforms will differ from platforms like Kickstarter.
“The general awareness of investment crowdfunding has increased substantially since April but there is still a meaningful opportunity to help entrepreneurs and investors better understand the nuances of the JOBS Act and early-stage investing,” said Ryan Feit of equity based platform SeedInvest.
- The message to the crowdfunding industry is be “visible and own your vertical.” When asked which platforms they will use, 34.67% said visible platforms. 34.34% said industry-specific platforms. Regional platforms received 14.74% response.
- Many will be raising capital for the first time: 36.14% raising capital for the first time, 18.75% in launch phase.
- While many may be new to capital raising, they are not all new businesses. 33.76% have business plans, 26.92% have prototypes, and 23.50% are already generating revenues. Only 15.81% are still at the idea stage right now.
“The CfPA will continue to take a leading role in education to create a strong and solid foundation for this new industry to thrive,” stated Ruth Hedges CEO of Funding RoadMap and founding board member of the CfPA.
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