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Is the crowdfunding bubble bursting?

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Is the crowdfunding bubble bursting?

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It would seem churlish to deny the impact crowdfunding has had over the last few years, with an ever increasing array of platforms providing funding for an ever expanding number of projects.  That many of these projects have been the kind that would not normally be served by more established funding channels merely adds to the allure.

Despite that however, Kickstarter, the king of crowdfunding sites, revealed rather disappointing trading figures for the first quarter of 2014 last week.  CEO Yancey Strickler revealed that pledges to the site averaged $1.24 million per day during that period, with nearly 4,500 projects backed by nearly 900,000 people.  That many of those backers were new to the site adds grounds for optimism.

The flipside of course is that the figures for this quarter put the site on pace to come in quite a way down on the figure raised during 2013.

Does this matter?  Is it really possible to draw any conclusions from this or is it merely a temporary slowdown on the site?

Suffice to say, Kickstarter is still the top dog when it comes to crowdfunding, and most of the biggest projects over the last few months have come from the site.  That said of course, there are a whole host of crowdfunding sites emerging, so the competition is fierce, especially in smaller niches.

It seems inevitable that as the industry matures, there will be a slowing in growth and consolidation as many of the sites that have emerged in recent years either close or merge with rivals.  We are already seeing people become a lot more selective about the projects they back, and of course the returns they expect from them.

With Kickstarter having the size and clout that it has, it is uniquely placed to weather any plateau in the industry better than most.  It may even become a takeover target itself for the likes of an eBay or an Amazon.

It’s always worth remembering just how new the crowdfunding industry is.  It seems inevitable therefore that it will undergo some considerable changes in the coming years as it matures.  What role Kickstarter plays in that will indeed be interesting to see.

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