What Are the Top 7 KPIs for a Crowd Investing Business?

As small business owners and artisans, understanding the key performance indicators (KPIs) for crowd investing in artisan marketplaces is crucial for achieving success. In a rapidly evolving industry, the ability to measure and assess marketplace performance is essential for making informed decisions and driving growth. In this blog post, we will explore seven industry-specific KPIs that are vital for monitoring and analyzing the performance of your crowd investing efforts. By delving into these KPIs, we aim to provide you with unique insights and actionable strategies to optimize your marketplace performance and achieve your business goals.

Total Capital Raised for SMBs

Definition

The 'Total Capital Raised for SMBs' KPI measures the aggregate amount of funding acquired by small-to-medium-sized businesses (SMBs) through the NeighborNest crowd-investing platform. This KPI is critical to measure as it quantifies the platform's effectiveness in facilitating capital acquisition for local businesses, which is central to its value proposition. The total capital raised directly impacts business growth, job creation, and economic development within the local community, making it essential to monitor and optimize.

How To Calculate

The formula for calculating the 'Total Capital Raised for SMBs' KPI involves summing up the funds raised by each SMB through the platform during a specific period. This includes all successful fundraising campaigns initiated by the businesses using the NeighborNest platform. The resulting figure represents the total investment capital garnered for SMBs within the defined timeframe.

Example

For example, if NeighborNest facilitated fundraising campaigns for four SMBs in a given quarter, with the respective amounts raised being $50,000, $75,000, $60,000, and $90,000, the Total Capital Raised for SMBs for that quarter would be the sum of these figures, which equals $275,000.

Benefits and Limitations

The 'Total Capital Raised for SMBs' KPI provides a clear indicator of the platform's impact on local business financing, demonstrating its effectiveness in fulfilling its core mission. However, it may not directly account for the allocation or utilization of the raised funds, and should be used in conjunction with other KPIs for a comprehensive assessment of performance.

Industry Benchmarks

According to industry benchmarks, typical total capital raised for SMBs on crowd-investing platforms in the US ranges from $500,000 to $1,000,000 annually. Above-average performance would exceed $1,000,000, while exceptional performance would involve raising over $2,000,000 in a year.

Tips and Tricks

• Regularly engage with SMBs to optimize campaign strategies for fundraising success.
• Utilize data analytics to identify patterns and trends in successful fundraising efforts.
• Provide educational resources and support to SMBs to enhance their ability to attract investment.
• Focus on fostering investor trust and confidence in the platform to increase investment activity.

Number of Active Investors on Platform

Definition

The number of active investors on the platform is a key performance indicator that measures the total count of individuals who are actively participating in making investments in SMBs through the NeighborNest Investment Co. platform. This KPI is crucial as it provides insight into the level of community engagement and interest in investing in local businesses. It reflects the effectiveness of the platform in attracting and retaining investors, which is essential for the sustainability and growth of the business.

How To Calculate

The formula for calculating the number of active investors on the platform is straightforward. Simply count the total number of unique investors who have made at least one investment through the platform within a specific time period, typically monthly or quarterly. This includes individuals who have made new investments as well as those who have reinvested in different SMBs. The resulting figure provides a snapshot of investor activity and engagement.

Example

Let's say that within the month of June, NeighborNest Investment Co. had a total of 500 unique investors who made investments in various local businesses through the platform. This would result in the calculation of 500 as the number of active investors on the platform for that month.

Benefits and Limitations

The number of active investors on the platform is a critical KPI as it directly impacts the success of NeighborNest Investment Co. A higher number of active investors signifies a strong interest in local investments and community engagement, leading to increased funding opportunities for SMBs. However, a potential limitation is that this KPI alone does not provide depth into the amount or frequency of investments made by each investor, which could impact the overall financial health of the platform.

Industry Benchmarks

According to industry benchmarks, a typical number of active investors on a crowd-investing platform in the US ranges from 500 to 1,000 for a moderate-sized platform. An above-average performance would be considered to have 1,000 to 2,000 active investors, while an exceptional platform would have over 2,000 active investors within a monthly time frame.

Tips and Tricks

• Implement targeted marketing strategies to attract new investors to the platform
• Offer educational resources and workshops to encourage community members to consider local investments
• Build trust and transparency to retain active investors and encourage repeat investments

Average Investment Amount per Campaign

Definition

The average investment amount per campaign is a key performance indicator that measures the average amount of funds raised for each crowdfunding campaign initiated on the NeighborNest Investment Co. platform. This ratio is critical to measure because it provides insight into the effectiveness of the platform in attracting investment from the community for small-to-medium-sized businesses (SMBs) within the local region. By tracking this KPI, NeighborNest Investment Co. can assess the impact of its efforts to connect local businesses with potential investors and evaluate the overall financial health of the crowd-investing ecosystem it has created.

How To Calculate

To calculate the average investment amount per campaign, divide the total funds raised for all campaigns by the number of campaigns initiated within a specific period. The total funds raised represent the cumulative investment made by community members in various SMBs through the NeighborNest platform. The number of campaigns initiated provides the total count of businesses that have utilized the platform to raise funds. The resulting figure offers an average amount of investment per campaign, indicating the level of financial support businesses are receiving from the community through the platform.

Example

For example, if NeighborNest Investment Co. raised a total of $500,000 for 20 different campaigns initiated by local SMBs, the average investment amount per campaign would be $25,000 ($500,000 / 20). This means that, on average, each campaign received $25,000 in funding from community investors through the platform.

Benefits and Limitations

The advantage of tracking the average investment amount per campaign is that it provides insights into the level of financial support that businesses are receiving through the NeighborNest platform. However, it's important to note that this KPI does not account for the varying funding needs of different businesses, and a high average investment amount per campaign may not necessarily indicate greater success. For example, a small, local restaurant may require less funding than a manufacturing company, influencing the average investment amount per campaign.

Industry Benchmarks

In the crowd-investing industry, the typical average investment amount per campaign can vary widely based on the size and type of businesses involved. However, an average investment amount per campaign of around $20,000 to $50,000 is considered a strong performance level. Exceptional performance may see averages upwards of $50,000 in funding per campaign, indicating robust investor interest and successful fundraising efforts by SMBs.

Tips and Tricks

• Provide transparent and detailed information about the businesses and their funding requirements to attract more diverse investors.
• Engage in targeted marketing efforts to reach potential investors with varying levels of disposable income and investment preferences.
• Establish strong relationships with local businesses to understand their funding needs and guide them through effective campaign strategies.
• Showcase success stories of businesses that have received significant support from the community to inspire and attract more investors.

Successful Campaigns Rate

Definition

The Successful Campaigns Rate is a key performance indicator that measures the percentage of successfully funded campaigns on the NeighborNest Investment Co. platform. This KPI is critical to measure because it provides insight into the effectiveness of the platform in connecting local businesses with willing investors. It is important in a business context as it directly impacts the financial health of both the SMBs and the investors. A high Successful Campaigns Rate indicates that the platform is successfully aiding businesses in securing the funding they need, while also providing investors with profitable opportunities. On the other hand, a low Successful Campaigns Rate can indicate that the platform may need to make improvements in its matchmaking process or the overall appeal of the businesses listed.

How To Calculate

The formula to calculate the Successful Campaigns Rate is as follows: number of successfully funded campaigns divided by the total number of campaigns, multiplied by 100 to get the percentage. The number of successfully funded campaigns represents the businesses that have reached their funding goals, while the total number of campaigns includes all businesses listed on the platform during a specific time period. This calculation provides a clear picture of the success rate of the platform in facilitating funding for businesses and returns for investors.

Example

For example, if NeighborNest Investment Co. had 50 successfully funded campaigns out of 100 total campaigns listed in a given month, the calculation would be as follows: Successful Campaigns Rate = (50 / 100) x 100 = 50%. This means that 50% of the campaigns listed on the platform were successfully funded during that month.

Benefits and Limitations

The advantage of measuring the Successful Campaigns Rate is that it provides a clear indicator of how well the platform is performing in connecting businesses with investors. However, a potential limitation is that it does not account for the size or impact of the campaigns. While a campaign may be successfully funded, it's important to also consider the amount of money raised and the actual impact on the business's growth.

Industry Benchmarks

According to industry benchmarks, a median Successful Campaigns Rate for crowd-investing platforms in the US is approximately 60-70%. Above-average performance would be considered anything above 70%, while exceptional performance would be 80% or higher.

Tips and Tricks

• Regularly analyze the Successful Campaigns Rate to identify trends and areas for improvement.
• Provide support and resources to businesses to create compelling and attractive campaigns.
• Implement a rigorous vetting process to ensure only viable businesses are listed on the platform.

Investor Retention Rate

Definition

Investor Retention Rate is a key performance indicator that measures the percentage of investors who continue to invest in a particular platform or business over a specified period of time. This ratio is critical to measure as it provides valuable insights into the platform's ability to retain investors and build long-term relationships. In the business context, a high investor retention rate indicates a strong level of trust and satisfaction among investors, which is crucial for sustained growth and success. It also reflects the platform's ability to provide attractive investment opportunities and maintain transparent communication with investors. Measuring this KPI is critical as it directly impacts the platform's reputation, credibility, and overall financial performance.

How To Calculate

The formula for calculating Investor Retention Rate is the number of investors at the end of a period, minus the number of new investors acquired during that period, divided by the number of investors at the start of the period, multiplied by 100 to get a percentage. The numerator represents the net change in the number of investors, while the denominator represents the initial number of investors. This calculation provides a clear indication of the percentage of investors who stayed with the platform over the specified period.

Example

For example, if a crowd-investing platform starts with 500 investors, acquires 150 new investors, and ends with 600 investors, the Investor Retention Rate can be calculated as follows: ((600 - 150) / 500) * 100% = 90%. This means that the platform was able to retain 90% of its initial investors over the specified period.

Benefits and Limitations

The primary benefit of measuring Investor Retention Rate is that it provides a clear indication of investor satisfaction, trust, and loyalty, which are crucial for the long-term success of the platform. However, a potential limitation is that it does not account for the actual investment behavior or the amount of investment made by retained investors. It is important to complement this KPI with other metrics to gain a comprehensive understanding of investor engagement and financial contribution.

Industry Benchmarks

According to industry benchmarks, the typical Investor Retention Rate for crowd-investing platforms in the United States ranges between 70% and 80%, with above-average performance reaching up to 85%. Exceptional platforms have been able to achieve Investor Retention Rates of over 90%, indicating a high level of investor satisfaction and long-term commitment.

Tips and Tricks

• Regularly communicate with investors to provide updates on the platform's performance and investment opportunities.
• Offer personalized investment recommendations based on investors' preferences and risk profiles.
• Provide transparent reporting on the performance of investments and overall platform activity.
• Implement loyalty programs or incentives to reward long-term investors and encourage sustained engagement.

Average Annual Return for Investors

Definition

The Average Annual Return for Investors is a key performance indicator that measures the average annual gain or loss on an investment over a specified period. This KPI is essential for assessing the performance of investments and provides useful insights into the profitability of the investment portfolio. In the context of NeighborNest Investment Co., measuring the average annual return for investors is critical as it indicates the financial success of the crowd-investing platform and the attractiveness of investment opportunities offered to community members. It also allows the company to gauge investor satisfaction and make necessary adjustments to ensure a positive investment experience for stakeholders.

How To Calculate

The formula for calculating the Average Annual Return for Investors involves determining the average percentage gain or loss of an investment over a specific period. This is calculated by taking the total investment return over the specified period and dividing it by the average investment amount, and then annualizing the result. The formula for calculating the Average Annual Return for Investors is as follows:

Example

For example, if an investor made a total investment return of $10,000 on an average investment of $50,000 over a 5-year period, the calculation for the Average Annual Return for Investors would be: ($10,000 / $50,000 / 5) * 100 = 4% annual return. This calculation provides an indication of the annual profitability of the investment over the specified period.

Benefits and Limitations

The Average Annual Return for Investors KPI allows NeighborNest Investment Co. to evaluate the overall performance of investment opportunities offered on the platform and make informed decisions to enhance investor satisfaction and attract more participants. However, it should be noted that this KPI does not factor in the timing of cash flows, which may affect the actual return experienced by investors.

Industry Benchmarks

In the US context, typical benchmarks for the Average Annual Return for Investors in the crowd-investing industry range from 4% to 6% for alternative investments such as crowd investing in SMBs. Above-average performance in this KPI may exceed 6%, while exceptional performance could yield returns of over 10%.

Tips and Tricks

• Regularly review and analyze the performance of investment opportunities to identify those that are delivering high annual returns.
• Communicate with investors to understand their investment preferences and make informed decisions related to future offerings.
• Consider diversifying investment opportunities to offer a variety of risk profiles that attract different types of investors.

Local Economic Impact Score

Definition

The Local Economic Impact Score is a key performance indicator that measures the extent to which a crowd-investing platform, such as NeighborNest Investment Co., contributes to the economic growth and prosperity of the local community. This ratio is critical to measure as it indicates the platform's effectiveness in leveraging community investments to support small-to-medium-sized businesses (SMBs) and stimulate local economic development.

How To Calculate

The Local Economic Impact Score is calculated by taking into account the total amount of investments made in local businesses through the platform and comparing it to the quantifiable economic impact generated by these investments within the local community. This involves analyzing the job creation, revenue generation, and overall economic growth resulting from the funded businesses.

Example

For example, if NeighborNest Investment Co. facilitated a total of $500,000 in investments in local businesses, resulting in the creation of 50 new jobs, $1,000,000 in additional local revenue, and a 10% increase in overall economic activity within the local community, the Local Economic Impact Score would be calculated as follows: Local Economic Impact Score = ($1,000,000 + 50 + 10%) / $500,000 = 2.1

Benefits and Limitations

The Local Economic Impact Score provides a comprehensive measure of the platform's success in fostering local economic growth and prosperity. By tracking this KPI, NeighborNest Investment Co. can demonstrate its positive impact on the community and attract more investors and businesses to participate. However, limitations may arise from the difficulty in quantifying certain intangible economic benefits, such as social capital and community cohesion, which are also important aspects of local economic impact.

Industry Benchmarks

According to industry benchmarks, a Local Economic Impact Score of 2.0 or above is considered indicative of strong local economic impact within the crowd-investing industry. Typical performance levels for this KPI in similar platforms across the US range from 1.5 to 2.5, with above-average scores exceeding 2.5 and exceptional scores surpassing 3.0.

Tips and Tricks

• Collaborate with local economic development entities to accurately measure the economic impact of funded businesses.
• Showcase success stories and testimonials from businesses and investors to highlight the platform's local economic impact.
• Provide transparent and detailed reports on the tangible benefits generated by community investments to build trust and attract more participants.
• Offer incentives or rewards for businesses and investors who contribute to significant local economic outcomes.