Crowdfunding is on the Rise: Here’s What That Means for Entrepreneurs

Latest posts by Judd Hollas (see all)

It’s fair to say that starting a business is bittersweet, especially in 2021. On one hand, it’s exciting to realize your entrepreneurial dream, but on the other hand, common challenges like raising business capital can discourage entrepreneurs from progressing a business venture. However, even during the pandemic, new business applications were at an all-time high. By the end of 2020, there were nearly 4.5 million applications, which was a 24% increase from 2019. This is certainly encouraging for entrepreneurs interested in starting a business in 2021, but for those who are still unsure about available capital, a new crowdfunding statistics report from EquityNet reveals valuations and funding goals are on the rise. 

StartupNation exclusive discounts and savings on Dell products and accessories: Learn more here

Read on to learn more about how business crowdfunding goals increased from 2007 to 2020 and how you can utilize these statistics to raise the desired capital for your business:

Average funding goal varied by industry

According to EquityNet’s proprietary data, in 2020, the average crowdfunding goal was more than $2.2 million, and the average funding goal increase from 2007 to 2020 was 36%. This double-digit percentage growth is a trend from which a wide range of industries have benefited. 

The Energy & Utilities industry had the highest average funding goal at just over $3.8 million, and the Consumer Products & Services industry had the lowest at $1.28 million. 

The data also revealed these two industries were at the top and bottom of the pre-money valuations table. Crowdfunding campaigns in the Energy & Utilities sector have the highest pre-money valuations — greater than $10.7 million on average — while the Consumer Products & Services campaigns have the lowest: $3.8 million. 

Regardless of the size of the funding goal, it’s great to see both metrics exceeded expectations and benchmarks. In fact, the average business valuations exceeded the 22% funding goal benchmark with an increase of 31% across the board between 2007 and 2020.

Crowdfunding raises reached all U.S. regions 

The data also examined the five U.S. regions, and when it comes to funding goals, the average goal in the West was $2.24 million compared to the Southwest region, where the average goal was $1.8 million. 

When you look even further at the age of companies, the Midwest has the oldest companies with an average age of 6.86 compared to the Southeast, where the average company is fewer than six years. Traditionally, most lenders prefer to lend to those that have been in business for at least a year or two. This could explain why the data found the Midwest and Southwest received the most equity, with the Midwest and Southwest both receiving almost 31% equity. 

Sign Up: Receive the StartupNation newsletter!

Key takeaways on crowdfunding

Overall, this report not only proves that crowdfunding raises are on the rise but that the ecosystem and business funding environment has a positive future for current and future entrepreneurs. Whatever your business idea, wherever the location of your business or the age of your company, take advantage of valuable resources and opportunities that come your way.

Previous Article
fishbone diagram

How To Use a Fishbone Diagram To Resolve Startup Issues

Next Article
wjr business beat

WJR Business Beat: New Insight on the Great Resignation (Episode 333)

Related Posts
Read More

9 Signs Your Business Needs Rebranding

When you've run a business for quite some time, it can be tempting to update the look and feel of your visual brand identity because you believe it’s the same-old-same-old. By rebranding, you might think that it can freshen your business and even give it a new life. But rebranding isn’t for always necessary. It’s...
Read More

WJR Business Beat: We’re Spending Even More Time Online (Episode 411)

In today's Business Beat, Jeff tells us consumers are spending more time online and explains what businesses need to do to reach them. Tune in below for more details on how digital use has changed with the pandemic:   Tune in to News/Talk 760 AM WJR weekday mornings at 7:11 a.m. for the WJR Business...
Read More

WJR Business Beat: Win $10,000 Grant Through Verizon Program (Episode 410)

On today's Business Beat, Jeff provides details of the Verizon Small Business Digital Ready program, including free resources, coaching and $10,000 grants to get your small business up and running. Tune in below for more details:     Tune in to News/Talk 760 AM WJR weekday mornings at 7:11 a.m. for the WJR Business Beat....
Read More

The Fear of Commitment: Why ‘No Obligation’ Is Music to Your Customers’ Ears

We live in a world with endless options and opportunities: where to live, where to eat, where to travel. Things to do, things to see… …Things to buy.  With so many options (and many at their fingertips), why would customers want to commit to something? They wouldn’t. And often don’t. After all, having too many...