Sizing the Market

CrowdSpotter’s Revenue Projections:

Portland

•Population: 2.2 Million

•Median Age: 35.8 Years

•Median Income: $47,033

Hawthorne

•Population: 12,000

•Median Age: 35.4 Years

•Median Income: $60,679

Projections

•Offering a 3% annual return to this population

•Capture about 525 people

•Raise $2 Million + 2 Million foundation match

•Average investment of about $3.8K from the first iteration.

•3% brokerage fee on $2 million = $60,000 in revenue

How I came to these numbers: I used our sole competitors information. On their site they list their offerings and the amount they have raised on each offering. Picking a neighborhood that was similar in income to some of the DC neighborhoods they were putting properties into. I then reduced our expectations a little bit in order to maintain a more conservative approach in my estimations of the amount of revenue to be expected in our first iteration. 

This first run through shows me that we would have to do multiple offerings in a year to be profitable. The $60,000 in revenue would be eaten in half by the expected legal cost associated with filing a regulation A offering. We would then still have to pay all our other cost such as employee compensation, office space, and data storage. I am still working on the number of “units” we would need to sell in order to profitable.

CrowdSpotters Market Size Projections

This has been a very difficult estimation for me. The way I have currently approached it is by taking the current crowd funding market and it’s monetary % of US donations and then taking that % and applying it to the REIT industries total market.

Crowdfunding:

2012: 1.6 billion spent through crowd funding platform

Expected to double in 2013

·      In 2012 300 bill given in charity

o   Crowd funding was therefore about .5% of total charity

So taking that .5% from the crowd funding as a % of charity we apply that number to the REIT industry’s total number.

REIT Industry:

·      670 billion in 2012

·      So taking .5% of that 670 billion

·      Which gets you $3,350,000,000.00 or 3.35 billion

This would be our initial market size expectation with it growing hopefully on par with the growth all of crowd funding is seeing.  So it would seem with few competitors and a field that has yet to have a player establish dominance there is currently a lot of money to be captured and spread around.

I wanted to share this base line calculations with the class because I am hoping that it might either help someone in their conceptualization of the size of the market and I am hoping that someone might have a better way to size the market. If you do please let me know.