It's a $133 Million dollar industry - and I'll prove it. This is quite a bit different from the reports you may see that claim it's $1.5 Billion. In March of this year I contacted the top 20 crowdfunding companies. I collected the total amount of money each platform raised & compiled it into a crowdfunding market report. The total raised reported directly from the founders of these companies: $133 Million.
You don't have to simply take my word for it just like you shouldn't blindly believe the "industry" is worth $1.5 Billion. So on to the proof.
The world's largest crowdfunding platform is easily Kickstarter. If you ask anyone to explain crowdfunding, they'll immediately mention Kickstarter. The two are synonymous. They, very publicly, reported raising $99 Million in 2011.
How many other crowdfunding companies can you list? Not many, right? IndieGoGo and RocketHub? Clearly there aren't that many successful crowdfunding companies. I found 20 that met my minimum requirements for researching. And from the list of 20, the platforms that are not in the top 4, are not seeing very much in funding. Let's stick with these 20 and extrapolate the market value.
If the clear leader raised only $99 M last year and the other 19 competitors raised exactly the same amount, the market value would be $1.9B ($99M x 20). Here's where it gets interesting.
Surprising to most, GoFundMe, a site you've probably never heard of, is one of the top 3 platforms. Recently, they made their numbers public on TechCrunch, announcing monthly donations of $2 million starting May 2012. Their publicly released infographic indicates they were raising $1M per month starting in Feb 2012. With an educated guess we can conclude they raised less than $1M per month throughout 2011. By measuring their stacks of infographic dollar bills, it appears to be about half. This puts GoFundMe's addition to the 2011 crowdfunding market around $6 million ($500k x 12months).
These are the only two major platforms with publicly available numbers, so I can't reveal the individual numbers of any other platform. If I take the largest case scenario and estimate RocketHub and IndieGogo's 2011 total amount raised to be identical with Kickstarter's, that would provide $297 million to the market. GoFundMe's $6 million would bring the total up to $303. Since the amount raised by the remaining 16 players must be less than GoFundMe's, let's assume they're all equal at $6M. This would provide an additional $96M, bringing the grand total up to only $399M. Far short of the $1.5 Billion claimed by "crowdfunding consultants" and the $3.2 Billion claimed by the CEO of a crowdfunding platform.
To provide some weight behind the individual numbers I can't reveal, let's look at the statistics that are publicly available: Facebook fans. Kickstarter leads with 396,258. IndieGogo: 53,456. GoFundMe: 12,952. RocketHub: 7,149.
Alexa traffic rank shows a similar result. Kickstarter has the highest traffic, followed by IndieGoGo at about half. GoFundMe has a smaller percentage, followed by RocketHub. Obviously these don't directly affect market size, but you need traffic to make money.
To round out the debate, let's focus on the definition. Crowdfunding, a subsegment of crowdsourcing, is simply getting a lot of people to do something that used to take one person (or small team) - In this case, give you money. In the past you would get money from a bank, family, investor, etc. I could get more technical, but there's no need. Crowdsourcing isn't the same as peer to peer lending, giving a dollar to a man on the corner, accessing an angel network, donating to charity, or even pitching in to the Church tithe box. Lending Club, Kiva, & charities are not considered crowdfunding platforms and the amount they raise can not be lumped into this brand new field. If you did you would have to consider family loans, Virgin Money, Red Cross, & even PayPal (they facilitate money exchange).
Reuters' Felix Salmon was the first to have the gusto to analyze the $1.5B claim & step up in his clearly articulated response. Liz Gannes, from All Things D, responds with the exact same concerns: There's no proof backing the $1.5B claim. I applaud these two for standing up. I've been begging to for months, but failed to go first.
This isn't all to say crowdfunding is failing. It's doing very well. In 2011 crowdfunding transferred $133 million dollars. It's on pace to transfer $350M in 2012. It'll hit $1.5B someday - just not this year.