Crowdfunding is the use of Internet-based money donations, rather than grants and corporate sponsorship, to provide financial resources for a project or startup company. The term 'crowdfunding' was coined in August 2006 by blog writer Michael Sullivan.
Online money processing companies like PayPal have existed since 1998, which allow person-to-person donations of money online, and for several years these services were commonly used by independent artists, musicians, and bloggers as a source of supplementary income which their fans could fund in support of their work. In 2003, the first online crowdfunding platform was created, ArtistShare, which gained popularity in the United States and paved the way for even more successful crowdfunding companies like Kickstarter (2009) and GoFundMe (2010).
A company using crowdfunding may offer prizes or benefits to their paying public, based either on a consumer paying over a fixed basic amount, or based on the entire project reaching a certain funding goal that allows them to expand their production. Some companies like Humble Bundle allow a basic substantial reward (such as a popular video game or e-book) to be purchased even for very small amounts, encouraging as many people as possible to contribute in order to receive that guaranteed reward. Humble Bundle also allows the donors to choose what portion of each donation goes to which recipients, such as content creators, charities, and the Humble Bundle organization itself.
Crowdfunding has provided the initial and ongoing finances for Welcome to Night Vale, Bee and Puppycat, and CrimethInc., and it has supported well-established content creators in producing merchandise for fans, such as Homestuck and Questionable Content. Crowdfunding is especially closely associated with webcomics and other graphic art online, podcasts, independent video game companies, and musicians and writers who do not already have the support of major record companies and publishers. There are a wide variety of crowdfunding platforms specific to each of these content genres, apart from larger and better-known crowdfunding platforms which do not restrict themselves by genre.
Other crowdfunding platforms and their years of origin include:
ChipIn (2005)
EquityNet (2005)
Pledgie (2006)
Sellaband (2006)
IndieGoGo (2008)
GiveForward (2008)
FundRazr (2009)
RocketHub (2009)
Fundly (2009)
Microventures (2010)
Fundageek (2011)
Crowdfunding has also opened up more venues through which consumers can become the victims of scammers, simply because producers can take the donated money and not fulfill the promises they make in the pitch they give as a reason for funding them. Some crowdfunding platforms provide consumers various methods of recourse against scams and unfulfilled promises, but in most cases recourse is limited. As a result, anybody intending to donate to a crowdfunded campaign or project is encouraged to think carefully about the actual viability of the project: unrealistic projects are frequently dishonest. It is also recommended that consumers research any company or content producer, as well as the crowdfunding platform in use, to determine if they are reputable and likely to compensate for any producers' deceptive practices.
Iron Noder Challenge 2014, 23/30