Betaworks’ unveiling of its new Alphaworks investment platform this week was the latest effort bolstering crowdfunding as a legitimate and even mainstream alternative for financing. Of course, crowdfunding also has well-known players like Kickstarter and Indiegogo as well.
Venture capital investors are playing a big role in the rise of alternative financial services – putting funding dollars toward both crowdfunding (equity, donation, reward etc.) as well as peer-to-peer lending platforms, matching individual borrowers and unrelated lenders or “peers.”
Demand for both crowdfunding and P2P lending platforms has grown but as the chart below highlights, P2P lending platforms have raised nearly $715M vs. $237M to crowdfunding platforms since 2009.
The most well-funded P2P lending company is Lending Club, which counts investors including Norwest Venture Partners, Canaan Partners and Union Square Ventures and is currently valued at $3.8B and is a Tech IPO Pipeline company. Chinese P2P lending company Renrendai announced a mega $130M round led by Trustbridge Partners in January. Other P2P lending startups that have raised $25M+ just since 2009 include UK-based Funding Circle, Benchmark Capital-backed Prosper Marketplace and Zopa, which raised a $25M round from hedge fund Arrowgrass Capital Partners last month.
There have been some notable VC financings in the crowdfunding space. Just last month, online crowdfunding platform Indiegogo raised a notable $40M round from investors including Kleiner Perkins Caufield & Byers and Institutional Venture Partners. Equity crowdfunding platform Angellist raised $24M last year at a rumored $150M valuation.
Interestingly, Union Square Ventures-backed KickStarter is among the most prominent crowdfunding platforms but last raised funding 48 months ago so will be one to watch in the coming months.
A list of the 20 most well-funded crowdfunding and P2P lending companies is available to subscribers on the ‘Research’ tab after logging into CB Insights. Login to or create a CB Insights account to identify and track all the companies that make up this analysis.
Note: Data in this analysis is as of February 2014.