The Evolution of Crowdfunding
Crowdfunding has now been in effect for over a decade and with these tough economic times, combined with global connectedness, are seeing the rise of this fundraising model.
Crowdfunding is now, more then ever, gaining momentum and is being closely scrutinized by the investment industry. Crowdfunding is a model directly based on a combination of crowdsourcing and angel investment. A complete evolution of the system is discussed below.
1. Crowdfunding tradition has its earliest roots in charitable campaigns held by big and small (mostly non-profit) organizations fundraising donations for charitable causes from a large audience.
2. Crowdsourcing, a term used for gathering consumer data and pooling intellectual and physical resources from a diverse group of people, is made very accessible and global through different social networks on the Internet. This connectivity and willingness to pool resources is the basis for crowdfunding.
3. Crowdsourcing forms the basis of a new model of financing that mobilizes Internet based social networks towards a fundraising goal.
4. 2006 Michael Sullivan coins the term crowdfunding, on 12 August for a fundraising effort of a video blogging community.
5. The ﬁrst crowdfunding project is not clear. Crowdfunding has had its origin in a vast number of places and spaces that have either been completely altered or are now extinct.
6. Two websites to embrace the term crowdfunding is rockethub.com and fundbreak.com.
7. Wikimedia launches one of the biggest crowdfunding efforts, aiming to raise £6 million. This was the ﬁrst time an entire organization’s ﬁscal budget was donated by its community members and users. Wikipedia continues to raise money from it supporters to fulﬁll operational costs for the organization.
As the excitement surrounding this new fundraising model grows, so does the potential. Crowdfunding is today under close watch of entrepreneurs, businesses, individuals, sporting communities and other investment model bearers who are looking to benefit from this development once it catches fire.
With the combination of micro payment systems and social networks, crowdfunding has a bright future ahead. As of now, the different platforms
and crowdfunding campaigns are supporting artists, musicians, journalists, film-makers, political campaigns and even scientific research. As we
head into an increasingly connected world this relatively new funding model is sure to become a fixture as a complimentary fundraising approach
to existing funding models.