Crowdfunding is the new, collective way of raising money for venture projects by asking a large pool of interconnected individuals for a small amount of money. It has been speculated that the financial climate after the global economic crisis gave rise to the culture of crowdfunding. However, the first online crowdfunded project is thought to have occurred as early as 1997, when the rock band Marillion was looking to finance a tour after their album release.
On the European market, alternative methods of financing projects grew very rapidly, with the market size reaching more than 5.4 billion euros as of 2015. Within crowdfunding itself, various types of platforms developed, such as equity, debt-based or reward-based crowdfunding. The two most frequently visited by Europeans and most successful types of crowdfunding platforms were equity-based crowdfunding and reward-based crowdfunding. In 2015, equity-based ways of alternative financing provided a transaction value of nearly 160 million euros. The highest average numbers of funders per fundraising deal on European platforms (excluding the UK) were 143 people in equity-based models and 142
in peer-to-peer business lending models.
Over time, not only individuals chose to resort to new ways of financing their business, artistic or social ventures. Also business enterprises in European countries reached out in search of new ways of obtaining financing to complement more traditional bank loans. In 2015, the distribution of financing received via peer-to-peer debt crowdfunding by small and medium British enterprises showed that approximately 27 percent of such companies raised between 100 and 249.9 thousand British pounds when using new financing methods. In that time, the most popular peer-to-peer lending platforms in the UK were Funding Circle, Ratesetter and Thincats.
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