[3] Although similar concepts can also be executed through mail-order subscriptions, benefit events, and other methods, the term crowdfunding refers to internet-mediated registries.
[5] The term crowdfunding was coined in 2006 by entrepreneur and technologist, Michael Sullivan, to differentiate traditional fundraising with the trends of native Internet projects, companies and community efforts to support various kinds of creators.
A clearer case of modern crowdfunding is Auguste Comte's scheme to issue notes for the public support of his further work as a philosopher.
The "Première Circulaire Annuelle adressée par l'auteur du Système de Philosophie Positive" was published on March 14, 1850, and several of these notes, blank and with sums, have survived.
In 1885, when government sources failed to provide funding to build a monumental base for the Statue of Liberty, a newspaper-led campaign attracted small donations from 160,000 donors.
[21][22] The campaign aimed for open-sourcing the Blender 3D computer graphics software by collecting €100,000 from the community, while offering additional benefits for donating members.
It also allows investors to purchase a stake in a claim they have funded, which may allow them to get back more than their investment if the case succeeds (the reward is based on the compensation received by the litigant at the end of his or her case, known as a contingent fee in the United States, a success fee in the United Kingdom, or a pactum de quota litis in many civil law systems).
[54] Ethical concerns have been raised to the increasing popularity of donation-based crowdfunding, which can be affected by fraudulent campaigns and privacy issues.
[15] An individual who takes part in crowdfunding initiatives tends to have several distinct traits – innovative orientation, which stimulates the desire to try new modes of interacting with firms and other consumers; social identification with the content, cause, or project selected for funding, which sparks the desire to be a part of the initiative; and (monetary) exploitation, which motivates the individual to participate by expecting a payoff.
Between January 2017 and April 2020 globally 99 venture capital financing rounds for crowdfunding platforms took place with more than half a billion USD of total money raised.
[15] In response to arbitrary crowdfunding curation on existing platforms, an open source alternative called Selfstarter[62] emerged in late 2012 from the project Lockitron after it was rejected from Kickstarter.
Recognizing the social and symbolic significance of the statue, publisher Joseph Pulitzer came to the rescue by launching a five-month fundraising campaign in his newspaper The World.
The National University was opened on December 21, 1908, in a large ceremony in the hall of the Shura Council of Laws, in the presence of Khedive Abbas II and senior statesmen and notables.
[72] As of late 2022, the highest reported funding by a crowdfunded project to date is Star Citizen, an online space trading and combat video game being developed by Chris Roberts and Cloud Imperium Games; it has raised over $500M to date, and while it has a devoted fan base, criticism has arisen for being a potential scam.
[73] On April 17, 2014, The Guardian media outlet published a list of "20 of the most significant projects" launched on the Kickstarter platform prior to the date of publication,[74] including: Musician Amanda Palmer raised US$1.2 million from 24,883 backers in June 2012 to make a new album and art book.
Examples include large companies like BackerKit that principally offer data analysis of campaigns, or Y Combinator, which acts as a startup accelerator and receives a significant number of its applicants from platforms such as Kickstarter and Indiegogo.
"[94] A variety of crowdfunding platforms have emerged to allow ordinary web users to support specific philanthropic projects without the need for large amounts of money.
Investment, via specialized online platforms in the US, is generally completed under Title II of the JOBS Act and is limited to accredited investors.
[106][107][108] In Europe, the requirements towards investors are not as high as in the United States, lowering the entry barrier into the real estate investments in general.
[109] Real estate crowdfunding can include various project types from commercial to residential developments, planning gain opportunities, build to hold (such as social housing), and many more.
[116] Initial studies found that crowdfunding is used within science, mostly by young researchers to fund small parts of their projects, and with high success rates.
Crowdfunding allows for small start-ups and individual journalists to fund their work without the institutional help of major public broadcasters.
[118][120] The website allowed for readers, individual donors, registered Spot.us reporters, or news organizations to fund or donate talent toward a pitch of their choosing.
"[122] As the popularity of crowdfunding expanded, the SEC, state governments, and Congress responded by enacting and refining many capital-raising exemptions to allow easier access to alternative funding sources.
A company can now broadly solicit and generally advertise an offering and still be compliant with the exemption's requirements if: Another change was the amendment of SEC Rule 147.
[15] Another potential positive effect is the propensity of groups to "produce an accurate aggregate prediction" about market outcomes as identified by the author James Surowiecki in his book The Wisdom of Crowds, thereby placing financial backing behind ventures likely to succeed.
One report claims that if every American family gave one percent of their investable assets to crowdfunding, $300 billion (a 10X increase) would come into venture capital.
In the US in 2015, new rules from the SEC to regulate equity crowdfunding will mean that larger businesses with more than 500 investors and more than $25 million in assets will have to file reports like a public company.
[139][140] The rise of crowdfunding for medical expenses is considered, in large part, a symptom of an inadequate and failing healthcare system in countries such as the United States.
[144][145] For instance, physicians are obliged to uphold the ethics of the medical profession, such as patient confidentiality, but this runs in conflict with dishonest crowdfunding efforts.