Market Size of Crowdfunding in Brazil

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Market Size of Crowdfunding in Brazil

There are no reliable statistics publicly available pinpointing the current size of the Brazilian crowdfunding market. However, a reliable estimate places the market at $12.7 million in total for 2016 and other evidence suggests the market continued to grow in 2017.

One current prediction estimates the 2018 market at $14 million and growth estimates from the established 2016 figure make that projection seem reasonable, as described in further detail below.

However, the mix of the types of crowdfunding prevalent in Brazil are prone to wide fluctuations from year to year, the data suggest. For example, rewards-based crowdfunding represented the majority of the market in 2015, only to be replaced by donation-based funding the following year.

Background Of Brazilian Crowdfunding Market

According to a deep dive on the subject published in The Brazil Business, the industry of crowdfunding effectively began as a noticeable market in Brazil in 2011. The initial launch point was the start of operation for Catarse, Brazil's first entry into the crowdfunding market and still one of the key market players.

Brazil has been the top crowdfunding leader in the South American region for a number of years, as shown in part by data published by Allied Crowds in the second half of 2015. At the time, the country featured 21 crowdfunding platforms. Brazil remained the top crowdfunding country in the region in 2016, the most recent year with reliable estimates, according to the Cambridge Centre for Alternative Finance.

However, it was topped by Chile that year in terms of total alternative financing. In addition, Mexico was the overall leader in Latin America, if countries of Central America are included in the discussion.

There are some aspects of crowdfunding that are emphasized in Brazil relative to other countries, according to The Brazil Business. For instance, Brazilian crowdfunding is more focused on micro-financing. The market in the country also heavily relies on donations and rewards.

There is some dispute among the sources as to the biggest players in the Brazilian crowdfunding market. The two obvious leaders in the segment, as measured by the fact that they are mentioned in multiple platforms, are Catarse and Kickante

The Brazil Business also notes Benfeitoria, Juntos.com.vc, and Sibite among the top five. Meanwhile, IDG Connect mentions Fondeadora and Broota among the top players.

Market Size

There are a number of competing estimates for the current crowdfunding market size in Brazil. Some of this discrepancy might arise from alternative models attempting to project the 2018 value of the market. Another possibility is that the different figures represent slightly differing definitions as to what constitutes crowdfunding versus other types of alternative finance.

As an example of this, Statista in different points in its presentation appears to show "crowdinvesting" as having a projected $14 million value for 2018 and "crowdfunding" as having a transaction value of $8 million for the same year.

Given the unreliability of these statistics, it seems prudent to fall back on more established figures, even if they are slightly older. Along those lines, the Cambridge Centre for Alternative Finance published a report in 2016 placed the crowdfunding market at approximately $12.7 million. This consisted of $3.1 million in equity-based crowdfunding, $7.1 million in donation-based crowdfunding and $2.5 million in reward-based crowdfunding.

With a relatively reliable estimate of $12.7 million for 2016, it seems likely that the $14 million estimate from Statista is more reasonable than the $8 million estimate. In 2016, the Brazilian market had been growing for the previous several years, and nothing in the general research suggested anecdotal signs of a decline in the intervening year.

A figure of $14 million would represent growth of approximately 10.2% from its 2016 base. This is derived by looking at the $1.3 million growth that would be necessary to bring the 2016 estimate of $12.7 million to a projection of $14 million for 2018.

According to the Cambridge Centre for Alternative Finance, 2016 levels were up about 5% from 2015, when it estimated the Brazilian crowdfunding market was at $12 million (not counting real estate crowdfunding, which only seemed to exist for that single year, making it reasonable to exclude it from a comparable total).

If the 2016 growth rate continued for 2017 and 2018, a total of $14 million would not be unreasonable.

Volatile Mix

While donations and rewards play heavily in the Brazilian market in general, as was noted earlier, the mix of types of crowdfunding can be volatile.

For instance, according to Allied Crowds data from 2015, 66% of Brazil's campaigns were rewards based, versus a level of 12% for the developing world as a whole. However, this level would drop drastically in the following year.

The stats from the Cambridge Centre for Alternative Finance for 2016 shows a sharp drop off in rewards-based crowdfunding for that year. In its figures, rewards made up approximately 20% of 2016 crowdfunding in the country ($2.5 million of a total of $12.7 million). However, this was counterbalanced by a spike in donation-based funding, which represented about 56% of the market for that year ($7.1 million of a total of $12.7 million).

Conclusion

It is reasonable to assume the current size of the Brazilian crowdfunding market is at least as large as the $12.7 million estimate for 2016. There is also reason to believe an estimate provided by Statista of $14 million for the 2018 market would be a reasonable projection. The mix of the Brazilian market has shown itself to be volatile, though there is a tendency to favor reward-based and donation-based funding.
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Sources