Why you should care
Because all investors want to know where the next Facebook opportunity is going to come from. A better understanding of crowdfunding opportunities can help.
A problem shared is a problem solved. That’s the theory behind crowdsourcing — people coming together to respond to demand for just about anything, from financial services and labor to information sharing and materials. A subset of that, crowdfunding — any finance that’s been aggregated online — is an exploding online marketplace that rang up a whopping $5 billion in transactions last year.
There’s just one problem: Opportunities in this “crowd economy” are growing at such a fast clip in number and variety that data analysis has lagged, leaving investors and industry wading into uncharted territory. As crowdfunding expands — revenue could hit $100 billion by 2018 if the annual doubling continues — the need to make sense of the trend grows along with it.
Emily Mackay, founder of Crowdsurfer, a startup based in Cambridge, England, knows that “we need some way of navigating, indexing and categorizing this new world.” So she and her team are building a global Bloomberg-like data aggregator for crowdfunding and peer-to-peer finance. She likens the situation to when Yahoo entered the Internet: Lots of information, no roadmap.
It’s like saying, ‘Here’s all the stock markets, but there’s no Bloomberg — go for it.’
Crowdfunding transactions range from peer-to-peer loans and business loans to charitable donations, shares, equity and even rewards. Name most any type of transaction and crowdfunding’s available for it; even mortgages and insurance, staples of the old economy, are cropping up to enable those who need funds to sidestep banks while allowing investors to enjoy higher returns.
Many know the popular crowdfunding sites — Indiegogo, Kickstarter, Rockethub — but there are nearly a 1,000 others (excluding China), with a new one coming online each week. Investors are flocking to them to check out new investment opportunities in products ranging from 3-D pens to space rockets. But they’re dipping into a vast new pool without floaties.
Online investment fundraising platforms are so new that they’ve had no aggregator, like an online money supermarket or a hotels.com-style site offering data analysis for crowdfunding and peer-to-peer finance. Without expert analysis to drive decisions, investors, financial institutions and in some cases industry are unsure how to seize emerging opportunities.
“It’s like saying, ‘Here’s all the stock markets, but there’s no Bloomberg — go for it,’” Mackay says.
With such a swell of information to navigate, investors could easily get swamped. “Our main aim is to be the de facto big data authority for the crowd economy,” she explains.
Mackay and her team pull all the relevant analytics data from the crowdfunding platforms, in some cases contracting with the sites to obtain the information. The team is forever data engineering and drawing new information as additional platforms and opportunities emerge.
Crowdsurfer, which launched in 2013, can be used in one of two ways. For the average investor or startup, its extensive search directory — currently undergoing maintenance — lists all of the available crowdfunding platforms by category, allowing browsers to find the projects or fundraising platforms they want to use (email firstname.lastname@example.org for more information). But that’s just the “tip of the iceberg,” MacKay says.
Crowdsurfer’s real charm is its ability to distill volumes of data in response to specific questions from clients, whether it’s a major financial institution or individual investor, with private, customized data dashboards.
Our main aim is to be the de facto big data authority for the crowd economy.
Most of the company’s current interest is from larger institutions that can afford the ticket price for a bespoke dashboard. Banks, which are being increasingly cut out of their traditional loan and financing roles, get detailed data showing how this is happening and in what volumes, while highlighting where they’re being threatened geographically. The data can also tell firms where they should be looking “to partner, launch or acquire a similar kind of business,” in a bid to stay ahead of the competition, Mackay explains.
Businesses seem to agree. “Crowdsurfer’s dashboard can help corporates identify trends in what the consumer markets are really prepared to back,” says Rich Wilson, CMO of Relative Insight, a firm that helps brands leverage language and data. “Using data to inform an innovation or investment strategy is a must-have these days, and cuts the time spent guessing.”
Based in Cambridge’s tech cluster — aka Silicon Fen — Crowdsurfer is still in pre-revenue prototype mode, though it already has several undisclosed high-level clients, including major financial institutions and industry leaders. “We’ve got more clients than we can handle at the moment,” Mackay notes.
Mackay — a young mother who rides her bike to the outskirts of Cambridge each day — is what one English newspaper called a “startup Ninja,” having successfully launched and sold the U.K.’s first crowdfunding site for community-based renewable energy products. Originally self-funded off the back of her previous startup success, Crowdsurfer is quickly gaining backers, including experienced angel investors from London, Europe and the Middle East, but Mackay declines to reveal how much has been raised.
Using data to inform an innovation or investment strategy is a must-have these days, and cuts the time spent guessing.
“We see huge value for investors, financiers, analysts and advisers worldwide in having access to a reliable, high-quality data dashboard,” says Alex Pitt, of Mustard Seed, an angel investing firm that backs Mackay.
Considering the size and growth of the market, it’s no surprise that others have set their sights on becoming the leading crowdfunding aggregator. Business Agent, for example, is raising funds in a bid to be the leading crowdfunding aggregator; the Crowdfunding Centre claims to offer real-time data and insights for crowdfunders and investors; and there are others. Mackay acknowledges the competition but says, “Crowdsurfer is by far the furthest ahead in terms of the data and computer engineering talent we have in Cambridge.”
“Add to that our protectable IP, experience of creating and exiting an online financial platform, and the caliber of our investors, and we’re simply well apart from the rest in creating the very highest-quality, collaborative finance data service.”
Crowdsurfer’s objective is to equip those chasing a piece of the multibillion-dollar crowdfunding action. Its primary focus is the business market, but Mackay hopes Crowdsurfer will eventually cast a wider net. Someday the data mountain could be manipulated to suit individual investors’ needs at a more reasonable price.
Mackay wants to “help the world navigate the vast crowd economy, so that we can all benefit.”
In other words, she wants to help them stand out from the crowd.