You can be on Entrepreneur’s cover!

Crowdfunding's Growth Spurt Going Strong Crowdfunding platforms are multiplying around the world and the sums that they're raising are growing exponentially.

By Catherine Clifford

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Crowdfunding is global and growing. Quickly.

There are approximately 600 crowdfunding platforms, which help users raise small sums of money from a group, throughout the world, according to Los Angeles-based crowdfunding and crowdsourcing research firm Massolution.

By the end of 2013, crowdfunding is expected to reach $5.1 billion in funds raised, Massolution reports. Of the $2.7 billion raised in 2012 from crowdfunding sites, more than half, $1.6 billion, came from sites based in North America. Another $950 million came from Europe.

Inside the Dramatic Rise of Crowdfunding
Image credit: Massolution

The most well-known type of crowdfunding is the Kickstarter variety, where a project leader requests a donation in exchange for a reward, such as participating in the project or receiving a product. A less well-known variety of crowdfunding is where an investor seeks financial return from his or her contribution to a campaign. Financial return can be equity, lending or royalty-based. In equity-based crowdfunding, an entrepreneur gives away a portion of his or her company for money. Lending-based crowdfunding requires repayment. Royalty-based crowdfunding is where the investors receive a share of earned revenue from an investment in a campaign.

Related: JOBS Act, One Year Later: Hang Tight, Equity Crowdfunding Is Coming

While donation-based crowdfunding has blossomed on the public stage for getting arts and music projects funded, the majority of crowdfunding campaigns back social causes or startups.

Inside the Dramatic Rise of Crowdfunding
Image credit: Massolution

Equity crowdfunding is already legal in the United Kingdom, the Netherlands, France, Austria, Germany, Australia and Hong Kong, among others. Currently in the U.S., only accredited investors can participate in equity crowdfunding. When the Securities and Exchange Commission writes final rules for the laws that were passed last year in the Jumpstart Our Business Startups Act, or JOBS Act, equity crowdfunding among non-professional investors will be legal in the U.S., too.

Related: Regulators Wrangle Over How to Protect Crowdfunding Investors

Geographically, North America and Europe are expected to extend their lead as the dominant home to crowdfunding portals, according to Massolution. More than half of the crowdfunding portals in various stages of pre-launch are in North America, including about 100 in the U.S., the company reports.

Inside the Dramatic Rise of Crowdfunding
Image credit: Massolution

Related: Crowdfunding Goes Mainstream: Why Donald Trump and Google Are Supporting Grassroots Financing

Catherine Clifford

Senior Entrepreneurship Writer at CNBC

Catherine Clifford is senior entrepreneurship writer at CNBC. She was formerly a senior writer at Entrepreneur.com, the small business reporter at CNNMoney and an assistant in the New York bureau for CNN. Clifford attended Columbia University where she earned a bachelor's degree. She lives in Brooklyn, N.Y. You can follow her on Twitter at @CatClifford.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Resumes & Interviewing

Build a Better Resume with This $35 Subscription

AI Resume Builder promises to help you apply to jobs twice as fast.

Side Hustle

He Took His Side Hustle Full-Time After Being Laid Off From Meta in 2023 — Now He Earns About $200,000 a Year: 'Sweet, Sweet Irony'

When Scott Goodfriend moved from Los Angeles to New York City, he became "obsessed" with the city's culinary offerings — and saw a business opportunity.

Marketing

I Got Over 225,000 Views in Just 3 Months With Short-Form Video — Here's Why It's the New Era of Marketing

Thanks to our new short-form video content strategy, we've amassed over 225,000 video views in just three months. Learn how to increase brand awareness through short-form video content.

Business News

Samsung Makes 6 Day Workweeks Mandatory for Executives as the Company Enters 'Emergency Mode'

Samsung said its performance "fell short of expectations" last year. Now executives are required to work weekends.

Productivity

6 Habits That Help Successful People Maximize Their Time

There aren't enough hours in the day, but these tips will make them feel slightly more productive.

Leadership

You Won't Have a Strong Leadership Presence Until You Master These 5 Attributes

If you are a poor leader internally, you will be a poor leader externally.