With a complaint of “All this dithering over Greece is getting boring”, a British man launched a crowdfunding campaign to raise money to bail out Greece’s debt. He calculated that if every EU citizen, excluding the population of Greece, were to donate a little over EUR 3.00, the current due interest payment to the IMF would be covered. In order to pay off Greece’s debt in full, however, everyone in the EU would need to donate nearly EUR 550. The odds were not promising and the campaign only managed to raise just under EUR 2 million from over 100,000 donors.
It was a donation, yet sort of a reward-based crowdfunding, with prizes of food baskets or a vacation in Greece on offer, depending on the contribution. The campaign was, of course, an all-or-nothing fundraising event, meaning that it would have only received funding if the EUR 1.6 billion goal was met.
Europe will not celebrate a debt-free Greece through crowdfunding, but the initiative was to be applauded and has been restarted with a new goal of EUR 1 million, which would go to support young people in Greece on their career path.
Crowdfunding is tool to raise money for funding private campaigns and it’s become a powerful peer-to-peer lending and investment source. For this reason, the Oxford English Dictionary has included it in its database which was last updated in June.
The basic principles of peer-to-peer crowdfunding have a long and rich history. Back in 1885, for instance, the US government failed to provide funds to build the base for the Statue of Liberty, so a newspaper started a campaign which raised donations from over 160,000 donors.
Yet it is advances in technology combined with the social sharing mindset which has led crowdfunding to its current heights.
Online crowdfunding
The first record of successful online crowdfunding occurred back in 1997, when a British rock band funded their reunion tour through donations from fans.
The mid 2000s gave way to more microlending platforms that allowed individuals to lend money outside the bounds of a traditional bank and support mainly artistic and cause-based projects.
The term crowdfunding was coined only in 2006, by Michael Sullivan, the founder of an incubator for videoblog events which included a funding possibility. The platform, described as being “based on reciprocity, transparency, shared interests and, above all, funding from the crowd,” turned out to be a failure, but the term crowdfunding was born. It was a few years later that the term reached the masses when the Kickstarter platform promoted funding for creative business startups.
Nowadays, a new crowdfunding platform seems to appear every day and the variety of fundraising campaigns is impressive: personal, charitable, medical expenses, artistic, educational, scientific, political, property development, entrepreneurship for early- and late-stage startups, and product retail. Whether it will fund a person’s dream to travel the word with a dog or a multimillion tech product, crowdfunding has become an increasingly popular way to fill the gap in modern capital funding models.
