LATAM Crowdfunding - Market Analysis

Part
01
of two
Part
01

Market Size of Crowdfunding in Latin America

EXECUTIVE SUMMARY
Crowdfunding in Latin America is still a growing market. We have credible sources proving so. Using various statistics I will be able to determine what each individual market cap for the three different types of crowdfunding are in Latin America.

FINDINGS

According to Statista, the total market size for crowdfunding in Latin America is $23,000,000 USD as of 2018. Another notable fact was that donation-based crowdfunding was estimated to have a yearly growth rate of 43% from 2014-2015. In 2015 Latin America accounted for $5,180,000 USD in donation-based crowdfunding.

According to this source we found, the equity-based crowdfunding transaction value in the Latin American region is forecasted to reach a total of more than $270,000,000 by 2020. The article also mentions that this is an emerging field in Latin America due to the fact that there is a huge demand for equity-based crowdfunding.

The most recent source that distinguished the market size for donation-based Latin American crowdfunding stated that there was 43% annual growth from 2014-2015 and that $5,180,000 USD came from Latin America.

Due to the lack of any direct identification, the information used to calculate Latin America's individual reward-based crowdfunding market was pooled together from different sources. I found a source that implied the that crowdfunding platform, LittleBigMoney is a huge reward-based crowdfunding platform in Latin America. Knowing that the total revenue of this platform is $5,600,000 USD, it is safe to say that is also the market size only for Latin America's reward-based crowdfunding.

CONCLUSION

To bring this to an end, I have searched extensively online for resources pointing me in the right direction of the crowdfunding scene in Latin America and have found that as of 2018, the total amount funded has been $23,000,000. I have also discovered that there is huge growth in this market at 13.1% per year.


Part
02
of two
Part
02

Market Size of Crowdfunding in Brazil

Rewards-based Crowdfunding and Donation-based Crowdfunding fall under the category of Non-investment-based Models of alternative financing. Equity-based Crowdfunding, on the other hand, falls under the category of Investment-based Models. In 2016, the total dollar amount raised in Rewards-based Crowdfunding amounted to $2.5 million. Furthermore, in 2016, Donation-based Crowdfunding and Equity-based Crowdfunding raised a total of $7.1 million and $3.1 million respectively. Note that the latest reports released on the alternative financing models of Brazil were in 2017 which covers the years 2014 to 2016. It is expected that reports covering the year 2017 will be released later this year. Hence, the latest data that we can give is for the year 2016.

BRAZIL ALTERNATIVE FINANCE market

For the year 2016, Brazil has posted a total of $64.4 million in transaction value of alternative financing. Brazil was hailed the third largest market in the Latin and the Caribbean market. The $64.4 million in transaction value is a collective value from all the alternative finance models that Brazil has, such as Marketplace/P2P Consumer Lending, Balance Sheet Consumer Lending, Marketplace/P2P Business Lending, Balance Sheet Business Lending, Marketplace/P2P Property Lending, Equity-based Crowdfunding, Real Estate Crowdfunding, Donation-based Crowdfunding and Reward-based Crowdfunding. The Balance Sheet Consumer Lending posted a total of $31.2 million in transaction value accounting for 48% of the total Brazilian market making it the largest alternative finance model in 2016. Marketplace/P2P Business Lending and Donation-based Crowdfunding took the second and third largest alternative financing model spots respectively in the Brazilian market for the year 2016.

REWARDS-BASED CROWDFUNDING

Rewards-based Crowdfunding is an alternative finance model which allows backers to provide, as an exchange for receiving non-monetary considerations, funds to individuals, projects, or organizations. It is a type of Non-investment-based Model of alternative financing. Through the years 2014 to 2016, Brazil has amassed a total of $4.4 million, $5.6 million, and $2.5 million respectively in Rewards-based Crowdfunding. The Rewards-based Crowdfunding in Brazil follows a fluctuating trend for the years 2014 to 2016. In fact, it is the only alternative finance model to have recorded a contraction in transaction value in 2016. The Rewards-based Crowdfunding was "down by 55% from $5.6 million in 2015 to $2.5 million in 2016". In 2018, it is estimated that the transaction value of the Rewards-based Crowdfunding in Brazil will amount to $8 million and is expected to be growing at a 3.2% CAGR through the years 2018-2022. Holding all others constant, following this growth rate, by the end of 2022, Rewards-based Crowdfunding in Brazil will have a transaction value of $9 million.

DONATION-BASED CROWDFUNDING

There are two types of Non-investment-based Models of alternative financing, one being the Rewards-based Crowdfunding and the other being the Donation-based Crowdfunding. Donation-based Crowdfunding is an alternative finance model which allows donors, based solely on philanthropic or civic intentions, to provide funds to individuals, projects, or organizations without expecting anything in return. For the years 2014 to 2016, the transaction value of the Donation-based Crowdfunding in Brazil had an upward movement. In fact, in 2014 and 2015, Brazil has amassed a total of $2.0 million and $4.7 million in Donation-based Crowdfunding respectively. In 2016, the transaction value of Donation-based Crowdfunding in Brazil amounted to $7.1 million which is up by $2.4 million ($7.1 million - $4.7 million) and $5.1 million ($7.1 million - $2.0 million) as compared to 2015 and 2014 respectively.

EQUITY-BASED CROWDFUNDING

Equity-based Crowdfunding is the only Investment-based Model of alternative financing that is being considered in this research. Equity-based Crowdfunding allows individuals or institutional funders to donate in exchange for investments in the form of equity issued by a company. Equity-based Crowdfunding also follows an upward trend through the years 2014 to 2016. Brazil has amassed a total of $150 thousand, $1.7 million, and $3.1 million in Equity-based Crowdfunding for the years 2014, 2015, and 2016 respectively. According to a forecast released by Statista, the transaction value of the Equity-based Crowdfunding will amount to $14 million in 2018 and is expected to grow at a CAGR of 35.9% through the years 2018 to 2022.

CONCLUSION

In conclusion, the Brazilian market is considered to be the third largest market in the Latin and the Caribbean market after raising a total of $64.4 million in alternative financing for the year 2016. The Brazilian market has raised a total of $2.5 million in Rewards-based Crowdfunding, $7.1 million in Donation-based Crowdfunding, and $3.1 million in Equity-based Crowdfunding in 2016.
Sources
Sources