The history of crowdfunding
This article was first published in the 3rd quarter 2018 edition of Personal Finance magazine
In modern parlance, crowdfunding refers to the online solicitation of funding for just about anything you can imagine, but the underlying concept is by no means new. In fact, its origins can be traced to campaigns dating from the 1700s and 1800s – and perhaps even further, depending on one’s interpretation of the term.
Its first documented use was in a blog by Michael Sullivan for a (now defunct) site called fundavlog.com, referring to fundraising for a video blogging community.
Alexander Pope, who translated Homer’s Iliad from Greek to English in the early 1700s, employed an early form of crowdfunding when he persuaded about 750 people to provide financial support for his work (the required pledge was two gold guineas). In return, their names were inscribed in the first edition of his work.
There are many such examples of crowdfunding in support of artistic, literary, cultural and other worthy causes. One of these was the campaign to raise cash to build a pedestal for the Statue of Liberty in New York. Over 160 000 people from all walks of life (including, we’re told, politicians and street cleaners) willingly coughed up for that project, raising just over $100 000. Interestingly, most of the donations amounted to less than a dollar.
Even Mozart got in on the act, inviting prospective backers to fund his plan to perform three piano concertos in Vienna. It took him two tries, but he eventually made his target. As a reward, his backers received his thanks in a manuscript.
Still with musical ventures, loyal fans of the British band Marillion raised an impressive $60 000 via an online campaign in 1997 to finance their US tour. The strategy worked so well that the band employed the same strategy to fund their studio albums. Six years later, a crowdfunding platform called ArtistShare (artistshare.com) began to make a name for itself as a conduit between artists and fans.
Weird … and just plain silly
Crowdfunding platforms have featured their fair share off oddball concepts over the years, which is arguably part of their charm and suggests that the people who run them are open-minded to a fault. Sometimes, however, the ideas are so “out there” that eye-rolls – and spectacular fails – are inevitable.
Among them are a saliva scanner (“if the fear of spit in your food is a concern, this is the gadget for you”), a mobile app called Who is Dating My Daughter (it rates boys on punctuality, politeness and respect “so that fathers can approve their daughters’ boyfriends”), and Strap and Crap, later renamed Loop and Poop (a harness for attaching yourself to a tree when you’re caught short outdoors). Interestingly, the last concept achieved over $2 000 of its $12 500 target.
Then there was the Thomas the Tank Engine-themed role-playing game (RPG), in which the player is transported into a world where new trains are “born into serfdom” and abused by power-hungry humans. For reasons as yet undisclosed, the British genius behind the concept failed to inspire a single contribution towards his £20 000 goal.
Still with power-starved humanity, Angel Santana thought he had come up with the perfect solution with his Gravgen gravity-powered generators. Three of these, he promised, would produce enough power to keep a 32-inch TV operating 24/7 (unless, he was careful to add, they were turned off).
Sadly, the advanced technology behind the Gravgen was not revealed, “except to say that they are simple devices with little (sic) moving parts and should be fairly easy to construct”. It’s probably unnecessary to point out that Angel fell short of his $250 000 goal (by $249 969, to be exact).