Crowdfunding has become quite popular in several countries including the United States, United Kingdom, and Canada, but have you ever wondered about the impact that crowdfunding could have on developing countries?
AlliedCrowds, an industry thought leader in developing world crowdfunding, has some of the answers.
“Crowdfunding has tremendous potential in the developing world as a way to fund solutions for localized problems, empower the diaspora, and establish capital flows into underserved parts of the world,” says AlliedCrowds founder and CEO Lars Kroijer.
Since AlliedCrowds was founded in 2012, they have been performing data analysis and working with the biggest international organizations to help the developing world embrace all that crowdfunding has to offer.
AlliedCrowds does this by providing useful data insights and technology solutions that make it easier for anyone with an entrepreneurial spirit to realize their potential.
AlliedCrowds recently released their monthly Developing World Crowdfunding report for August 2015, which features the most current data available on the amount of money raised in and sent to the developing world (along with information on industry size, growth projections, case studies, and more!). Below is a quick recap of the report to give you an idea of the state of crowdfunding in the developing world:
July Recap
The Developing World Crowdfunding report’s July Recap shared that, “Over last month, the combined market share of equity and reward crowdfunding has jumped from 16 to 21 percent.”
When you look at the breakdown by crowdfunding type it is clear that lending has the largest market share at 54%, with donation coming second at 25%. We’ve included a screenshot from the analytics section of the AlliedCrowds website below with updated data.
The top 5 categories in July were:
- Health – $3M+
- Agriculture – $2.5M+
- Services – $2M+
- Women and girls – $2M+
- Arts and culture – approx. $1M
The report also mentions some of the fastest growing countries in terms of crowdfunding. In July the first was Zimbabwe with 100% growth, making it “clear that growth can be sudden and explosive.” Zimbabwe is followed by Myanmar and Paraguay with about 20% growth each.
You can also check out a lot of great data on crowdfunding in the developing on their website’s analytics section.
Spotlight
The report states that, “South American crowdfunding platforms have raised $2.95m from over 3500 campaigns in July,” putting it ‘In the Spotlight’ this month.
A few important things to note: South America has not had much of a reputation for innovation, but government efforts to encourage entrepreneurship have recently helped the situation.
The continent has relatively high internet penetration rates (about 55%), but less than 10% of adults have access to online payments. Currently, there are solutions being worked on to solve the problem of online payment processing.
In time, South American crowdfunding platforms should see greater popularity around the world. Don’t forget, Spanish is the second-most spoken language globally. These projects have the potential to reach millions.
Regional Leader
The reports’ Regional Leader in crowdfunding this month was Brazil, where $980K was raised in July. AlliedCrowds estimates that Brazil’s crowdfunding platforms will bring in more than $11.5 million by the end of 2015. Throughout the month of July there were 1600 crowdfunding campaigns launched on 21 different platforms. Of these projects, 66% were reward-based campaigns.
It’s interesting to note that “Brazilians are heavy social media users, coming in second in the world (behind the US) in the number of both Twitter and Facebook users.”
Most Brazilian crowdfunding platforms operate in Portuguese, suggesting that they are not focused on attracting international funding. Still, the population is quite entrepreneurial, although nearly half of young entrepreneurs have found funding very difficult to access.
Crowdfunding has risen up as a way for startups to access funding in a way that wasn’t possible previously. The next step for Brazil seems to be establishing regulations for equity crowdfunding. Although there are already rudimentary regulations in place, there is hope that the law will go up for discussion by the end of 2015.
Crowdfunding for Education
Arguably one of the biggest ways that crowdfunding can have a positive impact on the developing world is through its contributions to education. The report states that, “Education is a crucial component for development. Not only does it teach useful skills, providing access to better jobs, but it is also an investment in the long-term prospects of economies, creating prosperous, knowledge-based communities.” Unfortunately, in the developing world, a good education is often still limited to a small number of wealthy citizens.
Crowdfunding has the potential to help change this situation by contributing to funding for enrollment and other hidden fees like uniforms and exam fees that can keep poor students from attending school.
With “UNESCO’s recent findings that both governments and international development organizations have failed to prioritize education financing,” people and organizations will have the opportunity to be more socially responsible and choose to fund specific causes and initiatives that they find important.
Conclusion
As you can see, crowdfunding is quickly becoming more common in the developing world, helping to solve funding gaps for education, startups, and more. While each region has unique strengths and barriers to crowdfunding adoption, there is still a lot that needs to be worked on (with the help of AlliedCrowds and their insightful reports) before this industry achieves its full potential.
“Crowdfunding is a small but very rapidly growing industry in the developing world,” said Shareq Husain, Head of Business Development at AlliedCrowds. “Organizations interested in crowdfunding should act swiftly if they want to secure a first mover advantage.”
These reports are meant to inform those who are interested in the crowdfunding industry, as well as companies, organizations, and charities that are interested in expanding into the crowdfunding market in the developing world. To read the Developing World Crowdfunding report in full, you can check out the AlliedCrowds website here.
