Has Crowdfunding

Reached Maturity?Photo Credit: LendingMemo.com By James O’Handley

Crowdfunding has really “taken off” in the last decade. But what is crowdfunding?

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According to Merriam-Webster’s Dictionary, Crowdfunding is:

“The practice of soliciting financial contributions from a large number of people especially from the online community.”[1]

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Modern day crowdfunding started in 1997 when a British rock band funded their reunion tour through online donations from fans. [2]

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The first official crowdfunding website was ArtistShare. It was founded by Brian Camelio in 2003.

Since then, it has helped fans fund hundreds of projects, many of which have received Grammy Awards and nominations. [3]

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Crowdfunding started with musicians funding their projects. But now, crowdfunding campaigns have begun in other fields such as:

Science Technology

And

But are all crowdfunding campaigns worthwhile?

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Not always… There have been some pretty bad crowdfunding campaigns. Such as...

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Charles Ellingson’s Campaign: “Drink a Redbull in Every State Post Video on Youtube” [4]

In which he plans to…

What else? Drink a Redbull in every state and post a video of it on Youtube.

$1 Pledged

$2,500 Goal

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Or, Justin Crowe’s Campaign:

“PAUL - The Sexiest Smartphone Charger on the Planet” [5]

Which is a giant phone charger shaped like a man’s torso, with a retractable wall plug coming out of the rear, and a charging dock on the crotch.

$2,160 Pledged

$ 8,000 Goal

Despite the terrible crowdfunding campaigns that are out there...

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many good campaigns have been successful.

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The Pebble: E-Paper Watch

Had 68,929 backers and raised

$10,266,845 [6]

The OculusRift

Raised $2,437,429

The Oculus Rift was later acquired by Facebook for a whopping

$2 Billion[7]

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Biologists Jennifer D. Calkins and Jennifer Gee raised almost $5,000 on Kickstarter [8]

The money they raised will fund their research on the behaviour and evolution of quails

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Other crowdfunded research includes the first crowdfunded lunar lander, and searching for moons outside our Solar System [9]

Research like this could lead to new scientific revelations that could broaden our understanding of the Universe

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Crowdfunding is also being used by students to help them pay for college

Gabriela Riquelme raised $1,700 to help pay her tuition. A goal she reached in only 2 days [10]

In 2015, a total of $27.3 Million has been donated to students through GoFundMe [10]

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So, has crowdfunding become a serious way to start a business?

Well, there was the guy who launched a kickstarter campaign to make potato salad...

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Zach Brown and his friends launched a Kickstarter to make potato salad as a joke

They unexpectedly raised

$55,492 in only one month!

They used the money they raised to not only make the potato salad for their backers, but also to put on PotatoStock. A music festival that raised money for aid organizations working to end homelessness and hunger [12]

A case of a silly joke leading to social good

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So, has Crowdfunding reached Maturity?

About half of all crowdfunding campaigns fail

And the total number of crowdfunding campaigns launched decreased from 2014 to 2015

But the campaigns that succeed raised 37% more money in 2015 than they did in 2014 [12]

So, in what direction is crowdfunding headed?

It seems like people are smart enough to avoid wasting their money on awful ideas. Which is probably why most campaigns fail...

But the people who make successful crowdfunding campaigns are getting better at it. Which is why the total money raised has increased.

If crowdfunding has not yet reached maturity, it is certainly on the right path

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Sources:[1] Crowdfunding. Retrieved June 04, 2016, from http://www.merriam-webster.com/dictionary/crowdfunding

[2] The History of Crowdfunding. Retrieved June 04, 2016, from https://www.fundable.com/crowdfunding101/history-of-crowdfunding

[3] About Us. Retrieved June 04, 2016, from http://www.artistshare.com/v4/About

[4] Ellingson, C. (2014, July 9). DRINK A RED BULL IN EVERY STATE POST VIDEO ON YouTube. Retrieved June 04, 2016, from https://www.kickstarter.com/projects/1800360658/drink-a-red-bull-in-every-state-post-video-on-yout

[5] Crowe, J. (2014, July 1). PAUL - The Sexiest Smartphone Charger on the Planet. Retrieved June 4, 2016, from https://www.kickstarter.com/projects/justincrowe/paul-the-sexiest-smartphone-charger-on-the-planet

[6] Pebble Technology. (2012, April 11). Pebble: E-Paper Watch for iPhone and Android. Retrieved June 4, 2016, from https://www.kickstarter.com/projects/597507018/pebble-e-paper-watch-for-iphone-and-android/description

[7] Schroter, W. (2014, April 16). Top 10 Business Crowdfunding Campaigns Of All Time. Retrieved June 4, 2016, from http://www.forbes.com/sites/wilschroter/2014/04/16/top-10-business-crowdfunding-campaigns-of-all-time/#3b97ebf203da

[8] Lin, T. (2011, July 11). Scientists Turn to Crowds on the Web to Finance Their Projects. Retrieved June 4, 2016, from [8] http://www.nytimes.com/2011/07/12/science/12crowd.html?pagewanted=all

[9] Gray, R. (2015, January 3). Crowdfunded science: Harnessing the wisdom of the crowd, or selling out? Retrieved June 4, 2016, from https://www.theguardian.com/science/2015/jan/02/crowdfunded-science-scientists-fund-research

[10] Blackman, A. (2015, November 2). Tuition Due? Time to Hit Up Everyone You Know; Crowdsourcing allows students to raise part of the money with a little help from their friends. Retrieved June 4, 2016, from http://search.proquest.com.proxy.queensu.ca/docview/1728576913?accountid=6180

[11] Thompson, E. (2014, September). Potato Salad Guy and the Prank That Raised $55,000. Retrieved June 4, 2016, from http://www.columbusmonthly.com/content/stories/2014/09/potato-salad-guy-and-the-prank-that-raised-55000.html

[12] Lewis, M. (2016, May 2). Majority of Kickstarter campaigns fail despite high-profile successes like Vanhawks. Retrieved June 4, 2016, from https://www.thestar.com/business/2016/05/02/majority-of-kickstarter-campaigns-fail-despite-high-profile-successes-like-vanhawks.html