Crowdfunding in developing countries could grow to $96bn/y – World Bank
Crowdfunding – the practice of raising funds from multiple individuals through the Internet – has rapidly developed into a multibillion-dollar industry in developing countries.
According to a new report commissioned by World Bank Group programme InfoDev, crowdfunding in developing countries was projected to reach $5-billion this year.
Further, preliminary modelling has shown that the possible market potential for crowdfunding in these countries could reach up to $96-billion a year over the next 25 years.
Crowdfunding, which first emerged in an organised form in the low-investment environment of 2008, had since grown exponentially, channelling funding to hundreds of thousands of ventures globally.
It combines the traditional practice of raising funds from friends, family and community members for projects or business launches, while leveraging the reach of the Internet, mobile technology and social networks to drive donations and investment.
“It essentially democratises financing, putting the decision to fund new ventures in the hands of the communities and customers who would benefit the most,” the World Bank said in a statement.
The report called for the further study of appropriate regulation and investor protection in light of the mechanism’s growing global popularity, adding that organisations such as the World Bank, governments, venture funds and nongovernmental organisations were closely monitoring it to determine whether it had the potential to solve the “last mile funding problem” faced by many start-up companies.
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