Click on the above image, or you can advance to the Spreadsheet of the Collaborative Economy Funding, to see a multi-tab analysis of funding, which I update on a regular basis. Caveat: This sheet is incomplete: People continually submit new data to me, and early stage funding is often not reported in public.
The Collaborative Economy continues to be a darling of tech investors. In a few short years, these companies have received incredible amounts of funding, totaling nearly $7 billion across 169 startups, with no signs of it slowing. Startups continue to seek investors to raise more funds, and investors are pressured by their own partners to get into the sharing and collaboration space. Here’s a few previews of what you’ll find in the sheet:
- This sheet contains ten tabs, with the main data tab having 513 rows, and five dynamic graphs, it includes:
- Summary tab
- Funding by Date (and year-by-year graph, and month frequency)
- Funding by Value in descending order (and graph)
- Funding by round type (a form of value)
- Funding by Industry (and graph)
- Comparison to popular social networks (and graph)
- As of today, there’s been a whopping amount of $6,884,248,411 funded in this market
- Span of Analysis is 12 years, however most has happened this year
- The transportation space has received the greatest amount of funding (see graph), dwarfing all other industries
- Total Startups Funded: 169
- Total Funding Events: 512
- Average Amount Per Funding Round: $14,933,294
- Average Total Funding Per Startup: $40,735,198 (that includes the outliers, like Airbnb and Uber)
- If you remove the outliers (Airbnb and Uber), the Average Total Funding Per Startup is $28,931,647
- There’s been more funding in this market than in Social Networks, by 26%, which I’ve written about on a prior post
Over the years, I’ve analyzed social network funding and the resulting social business software funding, and can see some patterns that are likely to repeat. Don’t expect most of these startups to succeed, as many are clones in a winner-take-all marketplace. Funding continues to pour in, and I expect us to cross the $7 billion marker in just a few months.
Transportation dominates the funding space, with Uber, Lyft, and BlaBlaCar taking the lion’s share. This is “market one” to be impacted, as there are significant numbers of idle vehicles that can be activated using mobile technologies. Crowdfunding, P2P Lending and other crowd-based currency industries are next, closely followed by physical space, and physical goods. Expect additional funding to follow in these categories.
I hope this sheet provides additional market clarity. You can use this funding data to forecast which types of startups will matter in the coming years. I had created a sheet tracking 2014 data, as I saw a surge in Q2. I am now abandoning that for the above sheet, due to the initial project success.
Social networks were the first phase of digital P2P. They enabled anyone to create media and then share it. The Collaborative Economy is the second phase. It enables anyone to create goods and share what they already own. So, how similar or different are the funding amounts for these two movements? This post provides some insight.
There are many ways to compare industries. I’ve conducted analysis on: adoption rates, attitudes, growth rates, and, in tech-heavy industry, funding rates. While investors have often known to be wrong, funding indicates bullish attitudes based on financial analysis and gut reaction to new markets. It’s a metric we must analyze.
If you want to see the full perspective of funding, advance to the Google Sheet of Collaborative Economy funding. Please note that there are multiple tabs.
To produce this comparison, we gathered publicly available information about consumer-facing, popular social networks, like Facebook, Twitter, and LinkedIn (and 17 others) to find out how much money a mature market, complete with winners, losers, and IPOs, has been funded. Next, we gathered public data about funding in the Collaborative Economy (Uber, Airbnb, Indiegogo, and hundreds others) to see what we could find.
A few analysis notes:
- Popular social networks are reported to have been funded by $5.4 billion over the last decade. Mostly “consumer” Collaborative Economy startups that enable the sharing of goods, services, food, money and vehicles, have been funded $6.8 billion
- If you compared, percentage wise, the Collaborative Economy has been funded 26% more than popular social networks.
- This isn’t an apples-to-oranges comparison: There are few fewer social networks (we looked at 20) than Collaborative Economy startups (we tabled 497). There is no public data for many social networks that died by the wayside lack.
- Often, funding in early stages is not reported, so it’s impossible to ever truly know what the total funding amount for many companies. Early seed and angel rounds aren’t typically reported.
- While social networks aren’t likely to be funded significantly greater, I expect that many Collaborative Economy startups are going to receive significantly more funding.
- I didn’t tally up enterprise social business software funding (community platforms, social media management systems) as there isn’t comparable software for the Collaborative Economy …yet.
This doesn’t mean that all Collaborative Economy startups will succeed. Markets often only have room for three players – not like the dozens of transportation players currently available. It could also mean that Collaborative Economy companies need to be more resource-intensive to lift off the ground. It certainly means that investors, many who funded social networks, are also bullish on this next phase of P2P sharing.
Below is my most recent essay to the WSJ Accelerator series, a dedicated section for the the fast-moving business audience. In this essay, I explore how we’re drinking our own champagne at Crowd Companies, by exploring and adopting crowd-based services.
The Ups and Downs of Crowd-Based Resources
Entrepreneurs today have no shortage of crowd-based services to augment their business models. Most people are probably familiar with Lyft and Uber, the ridesharing transportation services, but a large and dynamic industry of crowdsourced tools has emerged to help manage many aspects of running a business.
I’m currently experimenting with, adopting and using a number of shared services for all areas of my business. My company logo and design work, for instance, was mostly crowdsourced, using services such as crowdSPRING. Our research and content efforts are often augmented using companies like Elance-oDesk to hire experts on demand.
Our company’s social media accounts are handled by community managers from CloudPeeps. Prior, I’ve hosted company events at an Airbnb property, crowdsourced food from Feastly chefs and used photographers from TaskRabbit.
For company operations, rather than having a typically expensive long-term lease in San Francisco, we utilize co-working spots at the Impact Hub, LiquidSpace and Breather. I coordinate my schedule and events using virtual assistants from Zirtual. I depend on Shyp for shipping items on demand.
While we have full-time employees, often our independent, on-demand folks become core parts of our team. We even list our virtual assistant on our company website because she is often our key point-of-contact for our partners and customers.
From my experiences, here are some of the positives of using crowdsourced services to help manage your business:
- On-demand and cost-effective services. Why have a four-year lease when you are not going to be there all the time, or a full-time employee when you’ll only be working with them as needed? These services enable you to tap into dependable resources quickly, and allow you to only pay for what you need.
- Access to global, specialized talent. As the world moves to a freelance economy, we’ll see more specialized workers for tasks and projects become available on demand. Hiring, training and managing specialized workers isn’t practical — ‘sharing’ them enables both optimized utilization and talent when you need it.
- Less administrative overhead. One of the upsides of sharing models is to allow the burden of management, taxes and benefits to be shifted to the startups that offer the services. Some crowd-based companies make their employees full time and others classify them as 1099 contractors. Since performance is rated, clients can simply and easily change workers, using the same sharing service, if their work style isn’t matching company needs.
But crowdsourced services are not perfect. Here are some of the negatives I’ve noticed:
- New challenges. Using shared services has its own management and communication challenges. Managing crowd-based services can be more time consuming and may require patience, as you have to teach these providers your needs. In some global, online workplaces adjustments must be made for differences in culture. Crowd-based creative services, like Tongal, offer ancillary services to help clients manage the many moving parts.
- Quality can be sub-par. The old adage of “you get what you pay for” is often accurate in the crowdsourced market, especially if you don’t properly manage the services you use. Global and local marketplaces have overachievers and underachievers — it’s the law of probability. Your entire management team must be clear on goals, onboarding and clarity of communication in order to operate effectively.
- Debate over treatment of workers and globalization. Right now, there’s a debate over how ridesharing drivers and freelancers should be treated. Some don’t earn health and retirement benefits, and they often don’t have a voice with regulators. Expect new advocacy groups like Peers.org and the Freelancers Union to fight for the growing number of on-demand workers.
Now that we’ve explored the ups and downs, it’s important to prepare your company for these crowdsourced services. First, ensure that your institutional knowledge and business strategy are kept close to the chest and are your core skills. Then develop skills to manage crowd-based services by preparing clear goals and business metrics for real-time feedback and success.
Now your startup can efficiently and professionally tap crowd services for your business.
Mr. Owyang is the founder and chief catalyst of Crowd Companies, an association for large brands in the collaborative economy. He lives in Silicon Valley.
Your customers are making their own goods in the Maker Movement and sharing their resources, rather than buying them from you! Do you know why? We’ve conducted pragmatic research via interviews and other methods to find out. Consumers don’t need to continually buy from traditional companies because they are making, sharing, renting and lending goods & services among themselves.
[This rising behavior is being caused by three major trends: Social, Economic, and Technology drivers]
Analysis of Three Market Drivers: The Causes for the Collaborative Economy
In the research interviews, books, and content I’ve digested, I’ve found several common patterns relative to the causes of the movement. I realize that this is not a comprehensive list, so I appreciate your additions in the comment section of this post.
1) Social Drivers
||While also listed in Economic Drivers, denser population enables sharing to happen with less friction.
||Zipcar took off in urban San Francisco, where owning a car is impractical. Zipcar’s scattered storage lots give customers quick access to wheels, often walking distance.
|Mindset of Sustainability
||Greening, Cleaning, and Sustainability have been hot topics for years. This bolsters the need for economic conservation and long term thinking.
||Many of the startups we interviewed explained that this is about re-use or preservation of resources, rather than buying new products.
|Lifestyle Trend among Youth
||In Shareable Magazine’s book, Share or Die, Neal Gorenflo writes that this sharing mindset is common among college students who have limited resources.
||For resource-strapped students, Chegg enables students to trade textbooks, rather than buy at high margin bookstores. Social networking is part of their inherent behavior.
||In some cases, gifting or paying it forward are common in this movement. See list of gifting startups.
||A recent UCLA poll found that over 75 percent of incoming freshman believe it is “essential or very important” to help others in difficulty, the highest figure in 36 years.
||We heard from Molly Turner at AirBnb that many renters of homes found this service empowering. Their own homes were revenue generators for their independent lifestyle.
||Similarly, TaskRabbit advertises that their rabbits are: “College students, recent retirees, stay-at-home moms, young professionals,” enabling those who may not seek a full-time position.
2) Economic Drivers
|Increase in World Population
||China and India have population growth rates at 17% and 30%, respectively. America is at 22%. See Wikipedia.
||When I was born in the ‘70s, the world population was in about 4 billion; today it’s 7.1 billion. It is estimated to be close to 9 billion by the time I am 75 years old (data here).
||The interviews revealed a general sentiment that natural resources are finite and the cost to retrieve them is far greater than the potential return in revenue. Those with less money are more inclined trade, and to activate their inventory for revenue by sharing.
||Recycling programs are evident everywhere, even in the sales offices and break rooms there are recycled plates, utensils and paper
||Where there is a divide fixed between haves and have-nots, these sharing systems naturally seek to shift resources.
||For example, we saw a boost in Bitcoin value as Cyprus was under severe economic strain.
|Excess or Idle Inventory
||One of the root causes of this movement an abundance of idle resources sitting by the wayside that can be shared and often monetized.
||Rachel Botsman discusses in her iconic TED speech that the average usage of an electric drill is a mere 12 minutes per year.
||Those who can’t afford something, can now rent it. One successful Gen X banker told me that, “Access is more important than ownership”
||Why buy a $100,000 Lincoln Town Car, when you can rent an Uber for 30 minutes, saving money and headaches?
|Influx of VC Funding
||Venture capitalists have already put billions into this market of fresh new startups. Our research shows that there has been over $6 billion of funding in less than ten years.
||See the intense amount of funding in this market in my recent analysis.
3) Technology Drivers
|Social Networking Technologies
||These technologies provide three key features: 1:) Social profiles and reputations tracking, 2) Social graphics that enable people to connect, 3) Transfer of information, in this case, need for resources or supply of them
||AirBnb in itself is a social network. They have seller profiles, and renters have their own reputation with verified IDs. The goods traded are locations.
||Access to people or other resources requires “portability” for a majority of these services, so mobile platforms and devices for transfer of information become necessary.
||Many of these startups are mobile-driven. For example, Lyft has a thin website and suggests that users download mobile apps for this transportation site
||In the end, this is a marketplace of goods and services. Systems and platforms are required to broach the transactions that may use traditional ecommerce or new bartering methods
||TaskRabbit asks me to use my credit card, while other systems like Bittorrent are fueled by Bitcoins.
What it means: This is a long term movement, not a passing fad
I see three categories and at least thirteen distinct drivers for the Collaborative Economy. Like social media was to us in 2007, this is a broader movement that impacts many aspects of society and, therefore, business. If these market drivers are long-term (often social and economic drivers are), then this movement is likely to persist and to potentially increase in velocity. If you thought social business was disruptive, this next trend will impact us at a much deeper level.
Here are some of those from whom I regularly learn:
I originally posted a similar article over a year ago. It was time to revisit it with updated answers.
Below: see embedded slides, also on Slideshare
Ten years ago, we forecasted that social media would be disruptive to corporations. It was, but mainly to marketing functions, customer care, and corporate communications functions.
Fast forward to today, using these technologies and mobile apps, we’re seeing the rise of people getting what they need from each other: They’re sharing homes, cars, rides, money, goods, and their time.
This Collaborative Economy is forcing companies to rethink the relationship they have with their customers as the crowd is starting to become a competitor. In the embedded slideshare, I’m collecting stats of disruption and will update it over time as the market continues to develop.
To learn more, advance to my full body of work on the Collaborative Economy, including slides, research, info graphics, and more. Also, learn more about Crowd Companies, an association for large companies who want to lead this movement.
The longest graphic in the history of my career is embedded below, some mobile devices may not properly render.
As the Crowd Economy Rises, Brands Seek to Collaborate
We’ve been tracking corporations in the Collaborative Economy, and released version 1.0 in April, 2014. Now, as we approach the Crowd Companies members-summit in NY next week, we’ll be dissecting and analyzing the different deployments large companies are rolling out to participate in sharing, marketplaces, as well as co-innovation with makers. The scope? This collaborative or crowd based economy continues to rise (study, and daily numbers), and therefore corporations are adapting their business models to adjust to this peer-to-peer commerce movement.
Below Graphic: Frequency of Deployments
Since our initial tracking in Feb 2013, the frequency continues to increase. Since April 2014, we’ve found 27 new case examples, some that were before April 2014, but most were after. We’ve updated the following frequency chart to show the consistent deployment. It appears March was a slow month in terms of deployment (we do see a lot of conferences that month) and we saw a heap of deployments in August, which were due to Uber’s API partnership with several brands. We only counted the large brands like United, Hyatt, and Starbucks for the Uber API deal, as some of the others were smaller startups.
Below Graphic: Timeline Shows Each Deployment
The below timeline contains many of the deals, partnerships, deployments of corporations in the collaborative economy, using the same data set used in the above frequency chart. A great deal of these deployments are partnerships with startups, but we’re seeing many companies launch their own initiatives, which is a signal of corporations starting to invest more in these programs. There’s over 30 deployments in 2014 only, and most are partnerships, aside from Verizon launching a sharing service, starting with cars, and Walmart enabling game exchange.
The Future? Tracking will be Challenging as APIs Accelerate Exponential Adoption
It is my assumption that it will be nearly impossible to track this in just a few quarters. Since Uber has launched an API, expect Lyft and Airbnb to follow suit –resulting in Facebook-app-platform like adoption across the industry.