Global Perspective on Crowdfunding
While this chart is more reflective of data from 2011 – it begins to paint a very interesting picture. As we know, Crowdfunding is dominated by the Western World, with the United States and Europe representing about 80% of crowdfunding platforms (CFPs). North America and Europe factor to about 50% of the world’s GDP (measured in PPP – Purchasing Power Parity). It is appropriate to bear in mind that Asia currently represents about 44% of Internet users – and that is growing steadily.
What is patently obvious, however is the dramatic shortage of Asian-based CFPs relative to the population. That will work itself out eventually. Obviously, with countries like China, there are likely to be extra hurdles to cross relative to government regulation and restrictions on social networking. Still, as Asia represents over a third of world gross production, those best able to cross those hurdles will be the big winners in crowdfunding, especially in the long-term. There are multiple approaches including Asian-specific CFPs, increasing multilingual capabilities of existing CFPs, and partnering between entrepreneurs in Asian, African and South American markets.
As we are discussing the “internationalization of crowdfunding” (essentially), I’d like to refer those interested to the European Commission’s 2010 report on the Internationalization of European SME’s (External link to PDF file).
Note – this publication precedes the ramping up of crowdfunding’s popularity. There is enormous potential for crowdfunding to accelerate the growth of international business at the SME, even household, level. A long way to go, but it is an inevitable outcome.
The role of small business cannot be underestimated – though the West seems to be taking a baseball bat to it on a repeated basis. Small business is responsible for 50% of America’s GDP and nearly 65% of new jobs. Small and Medium Enterprises account for 99% of all European businesses – and 9 out of 10 businesses involve fewer than 10 employees.
Let’s say the average job in the United States or Europe is $48,000 a year. That’s the average annual wage for 2 Russians, 3 Turks, 4 Brazilians, 6 Chinese, 7 Ukrainians, 12 Indians, 20 Palestinians, or 80 Liberians. Crowdfunding is rooted in the development of small businesses. Growth is driven by small business. If everything else was equal – then investing in small businesses in developing countries vs. a developed one could mean starting out with one employee or ten.
There are numerous issues bearing as to why then entrepreneurs don’t set up shop in Liberia or Palestine. In all cases there are logistical elements and from there we get into safety, government stability, corruption, educational requirements, raw materials, various pricing barriers, and more.
While some will immediately see this as exploitation, and no doubt about it – it can be, and as practiced by the big companies, usually is. Conceptually, I would hope that we can think beyond that to see the process and long-term outcomes as it relates to specific people who need jobs and developing their potential. The best way to get to where you want to be is by helping others get to where they want to be.
PS. I’d have preferred to have left this article as a simple chart and the European Commission’s PDF file. I’m debating whether to continue on a controversial topic.