What opportunities does crowdfunding hold for the UK’s businesses, charities, government, and financial system?

Key findings

• In 2011, around $1.5 billion was raised through crowdfunding globally, funding over a million ventures, from start-ups to community projects
• It is possible that within five years, crowdfunding could provide around £15 billion of finance per year in the UK.
• Crowdfunding has a number of advantages over more traditional forms of funding, which means that more worthwhile projects and businesses can potentially get funded than would otherwise do.

Crowdfunding is hot news right now. Platforms like Kickstarter, Peoplefund.it, Buzzbnk, Zopa, Funding Circle and Crowdcube are allowing thousands of individuals to directly finance projects, businesses and causes.

In 2011, crowdfunders raised $1.5 billion, mostly in the US, to fund over a million projects, ranging from start-ups to community projects, and from new video games to scientific research. The UK crowdfunding market is small, but growing fast. We expect that over the course of 2012 UK crowdfunders will deploy double the £120 million they invested in 2011.

But the real growth lies ahead. It is possible that within five years, crowdfunding could provide around £15 billion of finance per year in the UK. With the right frameworks and standards this could grow even further, and a day could come where crowdfunding replaces a large proportion of the £115 billion financial services industry.

This report looks at how the UK's businesses, charities, government, and financial system can make the most of crowdfunding.

Authors

Liam Collins, Peter Baeck and Stian Westlake