When the global financial crisis struck in 2008 and the financial services industry in the United States and abroad suddenly decided to stop lending, many businesses got hurt. Like others, artists and entrepreneurs were not shielded from the impact. Naturally however, with the technology present, new opportunities emerged that could be be taken advantage of. The financial crisis helped spur the creation of a new model in which artists and entrepreneurs could find an alternate source of funding. Circumnavigating the struggle of trying to obtain the backing of a bank, crowdfunding came into being. Crowdfunding can be defined as an “open call over the internet for financial resources in the form of a monetary donation from multiple donors in order to provide an opportunity to an idea that wouldn’t have otherwise been able to attain financial support”. Crowdfunding sites such as IndieGoGo and Kickstarter have come into prominence these past few years as artists and entrepreneurs from all over the world are welcomed to submit their ideas to would-be investors. Crowdfunding has also been used in support of disaster relief, start-up political campaigns, start-up company funding, and to assist in funding independent film productions, software or video game development, inventions, scientific research, and civil projects.
Crowdfunding isn’t entirely a brand new subject. One could point to an early precursor that comes in the form of the American Committee for the Statue of Liberty in 1885. The funds needed to complete work on the Statue’s pedestal simply ran out and the panic of not knowing how they were going to get the money to finish set in. Joseph Pulitzer, newspaper publisher of the popular New York World, urged his readers to donate to the cause. This resulted in more than 125,000 citizens raising over $100,000 in the six months that followed. That’s an average donation of less than $1.00 per person. (BBC News Magazine, 2013)
Fast forward to 2014 and it’s clear that not much has changed. Now crowdfunding has merely become another internet channel to attract financial backing and achieve media coverage and exposure. In 2012, over two million people supported Kickstarter projects over the span of 18,000 successful campaigns that collected a total of $274 million. Kickstarter’s largest hit to date has been for an electronic watch that attracted over $10.2 million in investment. However the most successful crownfunded project of all-time is for an online space trading and combat video game by the name of Star Citizen. (Polygon, 2013) Still in development through Cloud Imperium Games, it has raised nearly $37 million all through crowdfunding.
Numbers are no lie and they are getting higher with every year that passes. The crowdfunding industry raised approximately $89 million in 2010 and went to become a juggernaut in the years that followed; $1.47 billion in 2011, $2.66 billion in 2012, and was projected to net $5.1 billion in 2013. (Huffington Post, 2013)
It may vary a little depending on the site but how crowdfunding works from the perspective of the person behind the project is simple. They register to become a member and create a profile page for their project similar to how one would create a Facebook page for their personal selves. Anyone can launch a project. The creators then pick a funding goal which they believe they can achieve