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Crowdfunding in Emerging Markets: Lessons from East African Startups

In the past 10 years crowdfunding – raising monetary contributions from a large number of people, typically online, to fund a project or venture – has evolved into a $16 billion market. It is growing around 300 percent per year1 and is concentrated in North America and Europe.2 The total crowdfunding market is composed of various sub-types, including lending (debt), equity, and royalty-based models, as well as non secularized types, such as charitable donations and rewards crowdfunding. Over the past few years, lending crowdfunding has been the fastest growing type (see Figure 1). The total crowdfunding market in the developing world is projected to be about $327 million for 2015 – about 2 percent of the global total.3 Despite its slow adoption in developing economies, crowdfunding has been heralded as an opportunity to expand access to capital for entrepreneurs. In 2013, the World Bank published a report, Crowdfunding’s Potential for the Developing World, which estimated a $96 billion crowdfunding market in the developing world by 2025.