Forget banks and traditional lenders. These days, crowdfunding platforms seem to be all the rage when it comes to finding creative sources of financing.
Established businesses, aspiring entrepreneurs, up-and-coming athletes and even struggling musicians are increasingly creating profiles online and seeking funds from regular individuals to back all sorts of projects.
In countries such as France, the Netherlands and New Zealand, sports fans are contributing money through Sportfunder.com specifically to support athletes in need of cash to pay for training courses, equipment and other costs.
Yomken.com, which is looking to expand throughout the Arab region, links funders to micro-entrepreneurs in Egypt who sell products in the country's industrial sector.
And music fans from around the world who have visited SellaBand.com, which is based in Germany, have pooled together more than US$4 million to back recording sessions for artists and independent bands who are trying to create new albums.
All told, more than 1.1 million crowdfunding campaigns met their funding goals last year, and a total of 813 platforms already exist or are set to launch, according to data from Massolution, a consultancy.
"As the market begins to reach another level of maturity many of the new portals and pre-launch portals are focusing on specific niches," says Carl Esposti, the chief executive of Massolution.
"We're seeing federal departments looking at [crowdfunding] as a potentially interesting vehicle for monetizing government assets and intellectual property, and extending the reach of public sector grant money," he adds. "We're also seeing very large financial institutions and international banks looking at it as a possibility at a country or national level to sit next to venture capital and microfinance for small to medium-sized businesses."
The growth rate of the money generated through online platforms that facilitate this kind of funding has accelerated in recent years, increasing 81 per cent, to $2.7 billion, in 2012 compared with a year earlier, according to Massolution.
This year, the industry is forecasted to generate $5.1bn in funds.
Sites headquartered in the United States, including Kickstarter.com and Indiegogo.com, have driven the market's growth globally.
According to data from IBISWorld, a market research firm, about 95 per cent of the money that goes toward projects around the world originate from platforms based in the United States.
"North America is still the dominant player and driving the global growth of this market," says Doug Kelly, a financial services industry analyst for IBISWorld.
Analysts and technology experts expect more individuals and enterprises to turn to crowdfunding platforms with pleas to the public, in part, because banks and other traditional institutions have kept tight caps on how much money they are lending to smaller players.
"Start-up capital is hard to come by, and lending is tight," says Dan Blacharski, the editor-in-chief of Techie.com, which covers emerging trends in the technology industry. "However, new models of funding are becoming mainstream, and start-ups are able to get the seed money they need, often through a crowdfunding issue."
The widespread adoption of mobile technology and cloud-based computing, which saves companies from having to create their own databases for storing digital information, is also nurturing the growth of new crowdfunding platforms and their use. "This is technology disrupting the financial services sector and allowing for the creation of a new funding channel, or a new way for small businesses to access start-up and growth capital," says Mr Kelly.
Those who support a crowdfunding campaign can earn a variety of paybacks once they share their funds. It really just depends on the project's creator.
Money given as either a loan or a donation is expected to remain the most popular kind of crowdfunding model this year, though reward-based schemes are expected to be close in comparison, according to Massolution.
Fans of the defunct television show Veronica Mars, for instance, provided enough money by mid-April - $5.7 million - that they successfully resurrected the series through a feature film while generating rewards in the process.
Those who contributed up to $10 will receive "exclusive" updates during the production of the movie, while more than $25 nabs a T-shirt. Three people who pledged $8,000 have earned the right to name at least one character in the film, and the one person who spent $10,000 or more gets to appear on camera as a waiter or waitress.
"You approach the table, and you say, 'Your cheque, sir,'" Rob Thomas, who created the show and started the campaign on Kickstarter.com in March, explains in the project's pitch. "We guarantee you will be on camera as you say the line."
Although this particular project raised more than double its $2m goal, most succeed by small margins, or fail by large ones, according to a working paper on crowdfunding that was updated in March by Ethan Mollick, a management professor at the University of Pennsylvania's Wharton School.
Mr Mollick, who analysed more than 48,500 projects with more than $237m in funds, also found that most project founders make serious efforts to meet their obligations with funders, "but that over 75 per cent deliver products later than expected."
Royalty-based campaigns that offer backers a share of a revenue stream without providing a stake in the actual company are the youngest, least-used type of model.
Equity-based crowdfunding, meanwhile, is poised to explode in growth. That is, once regulators in the United States finalise guidance and rules around how this will work. Some other countries, particularly those in Europe, have already taken steps to provide investors and investees with clear guidance in this area.
The equity-based segment of crowdfunding faces the most challenges, analysts say.
"There's significant concerns in the marketplace about investor protections," says Mr Kelly. "Venture capital has been a high-risk, poor-returning asset class, and the concern is there's a lot of investor money - not necessarily accredited investors - that are entering crowdfunding. And these investors may not be fully versed in the risk/reward profiles of investing in this type of asset class."
Deloitte, a consultancy, has also released a similar warning. In a report that covers crowdfunding, the company said that if investors end up getting burnt on equity-based deals, enthusiasm may dampen for this sector overall.
