New research showcases benefits of crowdfunding for entrepreneurs

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Research released last week by the Capital Crowdfund Advisors or CCA revealed that entrepreneurs who crowdfunded do quite well, Forbes Contributor Cheryl Conner reported. The research was done in August last year when the firm conducted interviews among hundreds of organizations in North America, Europe and Africa that had completed crowdfunding campaigns to get answers to questions related to this form of gathering capital.

The CCA report revealed that for companies who crowdfunded successfully, the average amount raised in all methods was $107,810. The average for equity raises produced $178,790, with firms selling 15% of their companies on the average, with figures ranging from 5% to 50%, Forbes reported.

The research showed that crowdfunding resulted to tremendous increase in sales. On the average, the respondents said their quarterly sales went up 24%, excluding the revenue gathered through crowdfunding. As far as equity-based fundraising goes, a sales increase of 341% was noted in post crowdfund quarterly sales, the report said.

Crowdfunding also paves the way for job creation, although the figures were not substantial. According to 39% of the respondents, an average of 2.2 new hires was added to their team after crowdfunding. Forty eight percent said they planned to use proceeds from the campaign for job creation, the report said.

Crowdfunding was not a deterrent for follow-on investments. Twenty-eight percent of the respondents said they were able to close funding rounds with angels or traditional venture capitalists within three months after a successful crowdfunding undertaking. Forty-three percent said they were in discussions with institutional investors. Conner found this finding intriguing inasmuch as there are a lot of traditional investors that avoid crowdfunded ventures "for fear of the complexity of managing groups of potentially unsavvy investors in the future efforts of marshaling votes."

However, the most compelling result of the research had to do with the ROI of crowdfund investing. For every hour poured into a crowdfund campaign, the return was $813, the report said.

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