Crowdfunding

Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people, today often performed via internet-mediated registries, but the concept can also be executed through mail-order subscriptions, benefit events, and other methods. Crowdfunding is a form of alternative finance, which has emerged outside of the traditional financial system.

The crowdfunding model is based on three types of actors: the project initiator who proposes the idea and/or project to be funded; individuals or groups who support the idea; and a moderating organization (the "platform") that brings the parties together to launch the idea .

In 2013, the crowdfunding industry raised over $5.1 billion worldwide.

History

Crowdfunding first gained popular and mainstream use in arts and music communities.

The first instance of crowdfunding was in 1997, when fans underwrote an entire U.S. tour for the British rock group Marillion, raising US$60,000 in donations by means of a fan-based Internet campaign. The idea was conceived and managed by fans without any involvement from the band, although Marillion themselves used this method successfully to fund the recording and marketing of their 2001 album Anoraknophobia, the first crowdfunded recording. They continued to do so with subsequent albums Marbles (2004), Happiness is the Road (2008), and Sounds That Can't Be Made (2012).