How much can you raise through crowdfunding?
Successful fundraisers, experts, industry leaders are sharing insights and experience, but the total number varies from thousands of dollars to millions of euros.
So, what’s the average capital amount you can raise with crowdfunding and minimum/maximum cap? Let’s figure it out together.
Regulation limits for capital raised in different countries
First off, it is regulatory authorities who set the tone and define fundraising limits.
Authorized crowdfunding platforms operating under certain rules (e.g. Reg CF or Reg D in the US) are obliged not to exceed the max possible amount of crowdfunding deals done via the portal.
They usually state it in the FAQs section or explain the limits on the fundraiser portals. This is what Wefunder says about the max fundraising size:
Before Jan 2021 borrowers could raise $1,070,000 per year with Regulation Crowdfunding. Recently the limit was increased up to $5M (good news!).
Those who opt for Regulation D can collect an unlimited amount from accredited investors.
Wefunder also runs Regulation A+ campaigns for free and lets businesses raise $1 million at max.
If you’re not familiar with the American regulation alphabet, let us explain to you the basics in layman terms.
Reg A (Reg A+) enables fundraisers to collect from $20m (Tier 1) to $75m (Tier 2) through “Mini-IPOs” and works well for small-scale issuers and relatively young companies.
Reg D, also called accredited crowdfunding, is a set of rules for big projects and campaigns with unlimited investment appetites. Only professional backers and 35 retail investors (max) can take part in deals.
Reg D offerings are more popular than public equity or debt offerings and typically run by private funds, real estate and tech companies.
And finally, Reg CF, which is a framework for small and early-stage startups who intend to engage the public in a capital generation.
Ths Crowdfunder reports that the average amount raised per Reg CF offering in 2020 was $342k (not too shabby, by the way).
What about other countries?
Crowdcube, a UK-based crowdfunding company, warns borrowers that the minimum amount they can raise with Crowdcube is £150k/€150k, the average raise is £670,000.
To date, Crowdcube’s largest raise is with BrewDog, the UK’s fastest-growing food & drink brand, which gained £42m+.
Seedrs explains that although there are no minimum or maximum amounts you can raise on the platform, they advise seeking as much capital as you need to scale up your business.
On average, startups on Seedrs gain £/€30,000 and £/€50,000 for MVPs, early-stage businesses wanting to generate income seek between £/€50,000 and £/€250,000, established growth-focused businesses – £/€250,000 and £/€1,000,000 or more.
Crowdcube and Seedrs are registered with FCA, a financial regulatory body in the United Kingdom, which doesn’t set any limit on how much a crowdfunding platform may raise.
But, if your goal exceeds €8 million of seed capital, you’re obliged to require a full-blown prospectus.
Similar rules are in France, Norway, Italy, Germany and other countries. Thresholds below which a prospectus is not required are applied in Spain (€5 million), Hungary, Czech Republic~, Portugal, Slovakia (€1 million).
In Australia and New Zealand, businesses can’t raise more than $5,000,000 AUD and $2,000,000 NZD respectively in any 12-month period.
Canada has more stringent rules: each round can generate no more than $150,000 and last no longer than 90 days.
So, before you start crafting a compelling crowdfunding campaign, check the fundraising limits outlined by the government and platform. They may not live up to your expectations.
Slicing the crowdfunding pie
Here are a few facts about crowdfunding means and averages:
- Successful crowdfunding campaigns have raised $28,656 on average, all campaigns – $824.
- Fully-funded crowdfunding projects have an average of 300 backers.
- The average pledge for fully-funded projects is $96, for all projects – $88.
- Videos help issuers earn 105% more.
- Updates boost your chances to raise 126% more.
- If you’ve managed to collect 30% of your goal within the first week, you’re likely to hit the goal.
- All-or-nothing model campaigns have twice as likely to be fully funded as keep-it-all (flexible) campaigns.
- If you look at an average crowdfunding campaign, you’ll notice that 42% of funds are raised in the first and last three days of it.
- Teams have more chances to get funding than solo campaigns.
The takeaway: to get things done, put a strong team together, opt for an all-or-nothing model campaign, run a great promo video and keep backers updated.
What if I and my business need more?
The amount you can raise through crowdfunding depends on a bunch of factors: your potential, business idea, project plan, the size of the crowd, platform specifics.
Experts and successful fundraisers share some tips on how to get more funding:
- do homework (find similar case studies, define the average selling price, calculate all costs);
- make sure you have enough time and resources to run and complete a campaign;
- set a realistic goal;
- structure your project, define the benefits your product/service is going to deliver to the client. A great product/service that hits the pain point is half the battle;
- seek early adopters for your product/service and ask them to share the feedback;
- go to Q&A platforms, media sites, news platforms, social nets and advertise your campaign there;
- do an email campaign to promote a project;
- choose the right crowdfunding platform with a focus on your niche;
- check the average amount raised with your crowdfunding company (it’s often presented in the stats section);
- make a detailed business plan and a promo video that stands out;
- to raise capital faster, create a sense of immediacy;
- seek professional help and get advice from crowdfunding experts.
Famous multi-dollar crowdfunding campaigns
To get you inspired, we’ve created this list of top-funded crowdfunding campaigns from different industries completed recently.
At the beginning of 2020, the Munich-based mobility provider Sono Motors has successfully completed its crowdfunding campaign and exceeded the target of 50 million euros.
Sono Motors has one of the largest community investing one million euros a day on average.
The reservation holders of the Sion – the first solar electric vehicle (SEV) gave around 75% of total funding, 19% came from regular and new investors and 6% were loans and donations.
The CEO of Sono Motors admits they’re going to bring the Sion into production as quickly as possible together with the crowd.
Frosthaven is a fantasy cooperative board game and the sequel to Gloomhaven that broke the Kickstarter record and managed to raise $12.9 million amid the pandemic.
It’s unbelievable, but Isaac Childres, the designer of Frosthaven, launched the campaign around 11 a.m. EST on Tuesday, and the game met its $500,000 goal in around 10 minutes. Wow-wow-wow!
In its interview, Isaac Childres said that the pandemic spurred the community into investment. People want to spend time together playing Frosthaven with friends and family.
Also, Childres offered a perk to buyers – a 17th character class – if Frosthaven hit $12.4 million. And it made it!
Milo – The Action Communicator
It’s another record-breaking crowdfunding campaign from Kickstarter promoting a wearable communicator designed for connecting adventure-loving people.
Milo does not require WiFi or cellphone connection and relies on a wireless mesh network.
Milo’s campaign lasted for 37 days and managed to receive $2.5 million in pre-orders, with more than 17,000 devices pre-ordered.
Also, Milo won CES® 2021 Innovation Award and became the 5th most funded technology hardware campaign of all time.
When it comes to crowdfunding, only the sky is the limit, of course, if this limit is not set by the regulator.
The average amount raised through crowdfunding depends on the country, niche and platform selected as a middleman.
The records prove the fact that every campaign has a chance to achieve the funding goal and even go beyond.
No matter how big your project is or what domain it comes from, you always can become the next top-funded crowdfunding campaign.
Find more about crowdfunding in our Crowdspace blog and stay tuned not to miss a post.