When you think of crowdfunding, your first association may be a friend asking for donations on Kickstarter.
While that’s how the industry started, “donation crowdfunding” has been eclipsed by crowdfunded investing, where investors purchase small stakes in projects ranging from tech startups to real-estate developments. In fact, investment crowdfunding (excluding community fundraising tools like Kickstarter) could top $300 billion annually by 2025, according to CFX Markets.
This evolution began after Congress passed the JOBS (Jumpstart our Business Startups) Act in 2012, allowing businesses to broadly market formerly private investments to individuals. The legislation was designed to help fund startups, so many early crowdfunding platforms focused on that. More recently, real estate has emerged as the fastest-growing segment of the industry.