12 Key Moments in the History of Crowdfunding (so far)
Have we been crowdfunding since the 18th century?
It might still be a bit too early to trace the history of crowdfunding. Most people would point to the birth of Indiegogo — the first and arguably the largest crowdfunding platform in the US, as the starting date. Yet, crowdfunding as a concept precedes digital or online crowdfunding. The idea of mobilizing the crowd to realize personal and public projects has been — believe it or not — an idea that existed even back in the 18th century!
Tracing the history of anything is more complicated than just putting down dates and names. History also implies evolution. And, crowdfunding is still in its early stages (probably still a Homo Erectus standing on its feet, learning to walk). Yet, a look at crowdfunding’s brief history tells us how it’s always been practiced even without the nomenclature or the strategy.
Here’s a look at some key moments in history for crowdfunding and an attempt at tracing its evolution:
1713: Alexander Pope taught us how to do Rewards-based crowdfunding right!
A young Alexander Pope, whose literary and lyrical prowess was yet undiscovered, was penning the English translation of Homer’s Greek masterpiece. As Pope laboured through 15,693 lines of The Iliad, he didn’t know how to find resources to publish it. In a prophetic twist, he turned to the people with a model that was then called the “subscription method” (early form of crowdfunding perhaps) where people could pay a certain amount to help him publish the first volume and receive a copy in turn when it was ready (pre-selling, anyone?)
The Appeal: Pope’s pitch was quite simple yet impressive. In his copy of ‘Rape of the Lock’ which he wrote a year prior to his translation, he “promoted” his campaign with the following words,
“This Work shall be printed in six Volumes in Quarto, on the finest Paper, and on a letter new Cast on purpose; with Ornaments and initial Letters engraven on Copper.”
The Rewards: The supporters were promised a shout out in the manuscript produced. The name of 750 backers was printed in the first volume.
Thus, Pope’s was perhaps the first creative project in history to be crowdfunded!
1783: Mozart on how to Thank Donors in Style
Even the great Mozart once lacked the funds to perform three of his newly written concertos at a Viennese Concert Hall. He started out by publishing an invite to potential backers in return for a manuscript of the concert. But, his popularity failed him the first time as he couldn’t reach his goal (even the best ones fail sometimes). However, Mozart wasn’t one to give up, he appealed again and this time found 176 backers who made the concert happen!
The Appeal:
“These three concertos, which can be performed with full orchestra including wind instruments, or only a quattro, that is with 2 violins, 1 viola and violoncello, will be available at the beginning of April to those who have subscribed for them (beautifully copied, and supervised by the composer himself).”
The Rewards: Mozart thanked each backer personally and printed their names in the original manuscript!
1874: Support Fundraisers by France and America to build the Statue of Liberty
France’s generous thought of gifting the United States of America, the statue of “Liberty Enlightening the World,” was unfortunately paused due to the lack of funds. Both the countries, realised the need raise money for this gesture, to America and to the world, formed a “Franco-American Union”. However, France couldn’t raise money to finish the statue in time for the centennial celebration of the American Independence. While the French committee tried its best to raise funds, they asked the Americans to fund the pedestal on which the 30-feet tall statue now stands.
Leading the fundraising effort in America was the renowned journalist, Joseph Pulitzer, publisher of the New york World. This was probably the first crowdfunding campaign that was promoted to the masses through the press. While France raised 250,000 francs for the statue and America raised $100,000 for the pedestal.
The Appeal:
“We must raise the money! The World is the people’s paper, and now it appeals to the people to come forward and raise the money. The $250,000 that the making of the Statue cost was paid in by the masses of the French people- by the working men, the tradesmen, the shop girls, the artisans- by all, irrespective of class or condition. Let us respond in like manner. Let us not wait for the millionaires to give us this money. It is not a gift from the millionaires of France to the millionaires of America, but a gift of the whole people of France to the whole people of America.” — Pulitzer in the New York World.
The Rewards: The French committee seeing lack of participation has to offer rewards like commissioned clay models and lottery tickets to the people. America received its icon of Liberty as a rewards!
1962 — Nehru adding the power of visuals to catch the crowd
India, under the British empire, had no exposure to the idea of crowds coming together to cause a change. While the Indian Independence movement does include small moments of crowdfunding where people contributed to leaders and movements, the biggest crowdfunding campaign was started by the first Prime Minister of Independent India — Jawaharlal Nehru. In 1962, as the war with China became an inevitability, Nehru appealed to the citizens to contribute for the war effort. The treasury of a 15-year-old nation couldn’t have sustained a war with its overpowering neighbour, had thousands of people, especially women, not donated their jewellery and money to the Defense of India Fund. Nehru is said to have collected over $220,000 in cash and way more in gold.
The Appeal: Even back then, Nehru understood the power of visuals and released this video to appeal for funds showing what each contribution could do.
1976 — Benegal and Kurien’s community crowdfunding
This was probably the first instance of “community crowdfunding” where a group of milk farmers in Gujarat came together to fund a movie on themselves. Benegal used the word “crowdfunding”, adding it to the Indian vocabulary and showing the country the unmatched potential of the model. Manthan chronicled the lives of farmers during the White Revolution led by Dr. Verghese Kurien. When Benegal presented an estimate of 10–12 lakhs for the film, Kurien instantly suggested that the farmers be made a part of the project.
The Appeal: Little is known about how Kurien convinced the farmers, but he said the following to Benegal:
“The milk farmers gather every morning and evening to sell their milk, and they are paid for the morning’s sales in the evening, and the evening’s sales, the next morning. Let me send a message to all the co-operative unions of Gujarat and ask them if the milk farmers would be willing, for just one morning, to accept Rs 2 less. They can then become producers of a feature film which tells their story. Why would they say no?”
The Rewards: The farmers were named producers of the movie and were given credits on screen.
1996 — Marillion going digital with crowdfunding
For many, the British rock band laid the foundation for modern crowdfunding platforms like Indiegogo and Kickstarter. It also pioneered crowdfunding for many artists and musicians who use the model till date to fund tours, new releases and performances. But in 1996, as Marillion was about to cancel a US tour due to lack of funds, fans came together to contribute $60,000 to make the tour possible. What was remarkable was that it happened over the internet for the first time in history!
Following the popularity and success of the method, in 2001, the band pre-sold their next music record, 12 months before its release. While, the appeal can’t be found, Marillion cracked the rewards well.
Rewards: They thanked their fans on the cover of the record!
2001: ArtistShare becomes the first crowdfunding website for creative projects!
Inspired by Marillion, American music producer and artist, Brian Camelio, started the first ever crowdfunding platform for artists. Camelio, debatably, called “the father of crowdfunding” is responsible perhaps, for developing the format that most modern crowdfunding platforms follow. The platform largely caters to music projects and has raised funds for 10 Grammy-winning music records!
2008- 2009 — Rise of Indiegogo and Kickstarter
After multiple struggles to find financing for her Arthur Miller play, Danae Ringelmann came together with Slava Rubin and Eric Schell to “democratize funding.” The idea was involving the audience/ consumer directly in an artist’s work. Indiegogo, was launched at the Sundance Festival in January 2009 and initially only hosted only creative and artistic projects, and later expanded to help entrepreneurs and startups receive initial funding through pre-sales. Kickstarter was launched in April 2009 in the same space.
Indiegogo and Kickstarter cumulatively have run at least 400,000 projects, including a Potato salad (yes!) and a Mission to Mars!
2012: Pebble broke the bar by raising more than 10 Million in a month!
The smartwatch innovator was backed by 78,471 supporters and raised the highest amount in the history of crowdfunding so far. They launched the campaign on Kickstarter with a humble goal of $100,000 which was rapidly surpassed to fetch them $10,266,845! Most called this campaign the birth of Kickstarter too, as the platform was initially struggling to bring on projects.
The Appeal: Pebble’s appeal was a detailed profile of the product, with its features.
Rewards: Pebble pre-sold the watches at a lower price than retail to those that would back the project. Different range of watches were offered as reward to different range of contributions.
2012: JOBS Act passes in the USA — bringing in equity crowdfunding
The Jumpstart Our Business Startups (JOBS) Act, signed by Barack Obama was a milestone for modern crowdfunding as it allowed startups and companies to find funding for their venture in exchange for equity and securities in their company. Also known as the Crowdfund Act, it perhaps put crowdfunding under a legal framework for the first time.
2012: Crowdfunding platforms emerge in India!
2012 was indeed a big year for crowdfunding. Witnessing the big things happening in the west, Indians too decided to leverage the strength of their increasing population. Wishberry was started on the model of Kickstarter to fund creative projects and ideas, Ketto and Milaap followed suit by also including non-profit fundraising. Impact Guru, joined in 2015 to become the largest platform to support medical causes!
While creative projects and technological innovations triumphed in the crowdfunding space in the west, Indians found themselves largely supporting medical and social causes.
2017: First ever India Crowdfunding Symposium — discussed the future of crowdfunding
In September 2017, Impact Guru and its international strategic partner, GlobalGiving came together to launch the first Crowdfunding Symposium in India which was attended by all top crowdfunding platforms along with some top Non-profits and CSR representatives like Arun Satija from Give India, Rahul Chowva from LetzChange, Murray Culshaw from IndiaCares Foundation, Pushpa from GuideStar India etc.
The Symposium held in Mumbai discussed through various sessions the present and the future of crowdfunding in India and concluded on some collaborative efforts and ideas to push crowdfunding ahead!
Crowdfunding has had an interesting history. Though, in one form or another, we’ve always known the idea and have realized the power of the people in bringing change, we’ve not found concrete ways to harvest that power — something that crowdfunding platforms today are working hard towards.
Many more moments are yet to come!
