The Evolution of Crowdfunding: A Decade in Review

A comprehensive guide to the history of crowdfunding

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Natalie Lin

A hand holding a lit lightbulb over the words The Evolution of Crowdfunding: A Decade in Review.

In 2013, Kevin Liang approached Label Creative to help him launch EcoQube on Kickstarter.

Label Creative was a scrappy little marketing agency started by three friends — Mark Pecota, Mike Revie, and Tom Dadourian — who’d met at a digital marketing internship their last semester of college.

None of them had any experience launching a crowdfunding campaign. But they were bright-eyed, hungry, curious, and ready to say “yes” to whatever work came their way. They dove head-first into EcoQube.

The results were astounding. EcoQube raised $79,026 on Kickstarter. Shortly after, Kevin came back with a new product called EcoQube C, and raised another $375,058.

EcoQube made it clear — crowdfunding seriously changed the game for new entrepreneurs. Label Creative turned their focus to crowdfunding and rebranded to LaunchBoom. The team of three grew to a team of twenty.

For the past decade, we’ve made it our mission to show entrepreneurs what’s possible through crowdfunding. The crowdfunding industry is still very, very new. At the same time, we’re building on a centuries-old legacy in human history.

At its core, crowdfunding is when a community, a “crowd,” comes together to fund a new venture. And this concept has been around longer than we might think. Let’s look back at the evolution of crowdfunding over the years.

The history of crowdfunding: through the years

Here’s a brief history of crowdfunding, starting with early examples, into the birth of modern crowdfunding, and lastly, reaching the recent crowdfunding boom.

How did it start?

Did you know the history of crowdfunding dates back to the 13th century?

In the Late Middle Ages, constructing a cathedral took significant funding and resources. Affluent parishioners gave portions of their income or estate in exchange for a burial spot under the cathedral. Less wealthy individuals offered materials and labor. Professional guilds made donations so they could be illustrated in stained glass windows.

In the 13th century, merchants also participated in an early form of risk management. City traders jointly financed shipping expeditions that were risky, expensive, yet exceptionally profitable. Then, they mutually benefited from profits or shouldered the losses.

Early examples of crowdfunding in history

Many early records of crowdfunding come from poor, disadvantaged communities. It makes sense. At the end of the day, crowdfunding is about supporting promising entrepreneurs who are individually lacking in means.

Irish Loan Fund

In the 1700s, Jonathan Swift (you might know him as the author of Gulliver’s Travels) set aside £500 for zero-interest loans to the “industrious poor” — honest, hardworking individuals who wanted to embark in trades but lacked the capital. Borrowers had to present a guarantee from two neighbors to demonstrate they were creditworthy.

Local associations, like the Dublin Musical Society and the Irish Relief Committee, followed suit. Impoverished, rural families could now secure their own livelihoods.

Modern Microfinancing

In 1976, Muhammad Yunus visited the slums of Jobra, a village near Chittagong University in Bangladesh. He noticed that village women who made bamboo furniture didn’t qualify for traditional bank loans. Instead, they had to take extremely predatory loans from local lenders.

Yunus believed that the tiniest loan could make a world of difference to a poor household. He lent $27 to 42 village women, and each made a small profit. Modern microfinancing was born.

Grameen Bank

Microfinancing is the act of providing funding to low-income, marginalized groups who lack access to conventional financial services. Yunus opened the first microfinance institution, Grameen Bank, meaning “Rural Bank” or “Village Bank” in Bengali. The project expanded all over India. When Yunus won the Nobel Peace Prize in 2006, Grameen Bank had supported over 7 million borrowers.

​​The birth of modern day crowdfunding

The late 20th and early 21st century saw some major technological advances. Notably, the world went digital. And so did crowdfunding.

1996-97: Marillion takes Crowdfunding digital

The year was 1997. Marillion had fallen from mainstream glory. Twelve years prior, the British rock band had released hit after hit, blasting into UK’s top 10 albums and top 40 singles. But they’d gone out of fashion. They were dropped by their label, EMI Records.

Still, Marillion maintained a loyal cult following. Fans on their forum begged for an American tour, but the band wasn’t optimistic. A US tour would cost over $60,000; with royalties drying up, it didn’t seem feasible.

Undeterred, the fans set up a US tour fund. One thousand fans pitched in. The fund caught media attention, and in six months, the tour was fully funded.

Three years later, Marillion began work on a new album, Anoraknophobia. They again turned to their fans: Would fans be willing to preorder an album months in advance, an album that didn’t exist yet? The answer was a resounding yes.

Preorders poured in. In return for their pledges, fans received special edition CDs, complete with bonus tracks and little booklets with the names of all the backers. Marillion paved the way; now, it’s common for artists to raise funds through preorders and pledges.

2003: ArtistShare: The first crowdfunding platform

In 2003, ArtistShare became the first commercial crowdfunding website. Artists could interact with fans, share their creative process, and raise funds — all without the backing of a professional record label.

In 2005, Maria Schneider’s Concert in the Garden became the first album to win a Grammy solely based on internet sales. To date, ArtistShare has produced 29 Grammy nominations and 10 Grammy awards.

2004: Zopa & Debt-based crowdfunding

Zopa Bank, launched in the UK, was the world’s first peer-to-peer lending company. Zopa offered four different investment products based on the investor’s risk and return appetite. Investments were then split across multiple borrowers, and investors received monthly interest and capital repayments. Borrowers used Zopa to fund purchases like home improvement, cars, and weddings.

2005: Kiva launches Microlending

In 2003, Muhammad Yunus taught a lecture at Stanford Business School. In attendance were Matt Flannery and Jessica Jackley. Inspired, the couple interviewed village entrepreneurs in East Africa. Like Yunus, they saw a common theme — the biggest roadblock for entrepreneurs was the lack of capital and financial services.

In 2005, Flannery and Jackley founded Kiva, meaning “Unity” in Swahili. Kiva has a network of over 300 field partners, including microfinance institutions, social impact businesses, schools, and nonprofit organizations all over the world. Since its foundation, Kiva has financed over 1.6 million loans.

​​H3: The crowdfunding boom

From here, crowdfunding experienced a major boom. All of a sudden, crowdfunding became a mainstream concept.

2006: Prosper introduces Peer to Peer lending

With Prosper Marketplace, the US got its first peer-to-peer lending marketplace.

Prosper was the self-described “eBay of loans.” From 2006 to 2010, lenders and borrowers determined loan rates through a reverse auction system. A borrower stated the maximum interest rate they were willing to pay for a loan, and then lenders bid lower and lower rates. In 2010, Prosper transitioned from variable rates to pre-set rates based on a loan pricing algorithm. Today, they have over $23 billion in funded loans.

2006: Michael Sullivan & fundavlog coin the term “Crowdfunding”

In 2006, Michael Sullivan launched Fundavlog, a funding platform for video bloggers. He coined the term “crowdfunding” to describe his concept:

Many things are important factors, but funding from the “crowd” is the base of which all else depends on and is built on. So, crowd-funding is an accurate term to help me explain this core element of Fundavlog.

Sullivan’s project ultimately failed, but the term “crowdfunding” stuck.

2008: Indiegogo launches and reward-based crowdfunding goes mainstream

Indiegogo was founded to help producers of independent films, hence its name. The site officially launched at the 2008 Sundance Film Festival.

Quickly, Indiegogo branched into new categories — hotels, eBikes, tech, food, etc. As we know, it’s one of the most prominent crowdfunding platforms today, netting 10 million visitors each month from 235 countries and territories.

2009 : Kickstarter launches and the crowdfunding race is on

A year later, Indiegogo had a major competitor. Kickstarter was, according to Time Magazine, one of the “Best Inventions of 2010” and “Best Websites of 2011”. The New York Times called Kickstarter “the people’s NEA”.

Kickstarter is a giant in the crowdfunding industry. It’s raised over $7 billion in pledges for over 250,000 projects.

2011: Obama unveils the Start Up America Partnerships

In 2011, President Barack Obama launched the “Startup America” initiative. His goal was to “celebrate, inspire, and accelerate high-growth entrepreneurship throughout the nation.”

Alongside the initiative came the Startup America Partnership, an independent alliance by entrepreneurs, for entrepreneurs. In its first two and a half years, the Startup America Partnership built a network of over 13,000 startups across the country.

2012: Fundable & JOBS act

In 2012, Obama signed into law the Jumpstart Our Business Startups Act, or JOBS Act. The act loosened securities regulations for early-stage businesses. For the first time in the US, companies could use crowdfunding to issue securities.

Three months later, serial entrepreneurs Wil Schroter and Eric Corl launched Fundable, a “software as a service” platform where startups could raise capital through rewards-based or equity-based crowdfunding campaigns.

Modern day crowdfunding

And that takes us to the present. Crowdfunding is a growing choice for entrepreneurs of all industries. In 2022, there were 6,455,080 crowdfunding campaigns launched worldwide.

If you’re considering crowdfunding for your business, there are a couple of things you need to know about the current crowdfunding landscape.

What are online platforms?

As of 2021, the United States alone had 1,478 crowdfunding organizations. Here are some of the biggest online platforms in the industry:

  • Indiegogo started as the premiere fundraising platform for independent films. It’s now a powerhouse for tech and innovation, creative works, and community projects.
  • Kickstarter is the biggest household name in crowdfunding. It’s surpassed Indiegogo in funds raised and monthly visitors. And it’s hands-down the best crowdfunding platform for games.
  • GoFundMe is popular for personal funding and charitable causes. If you’ve seen a viral campaign for medical expenses, disaster relief, or community initiatives, it most likely came from GoFundMe.
  • Patreon is a monetization platform for content creators like musicians, artists, writers, and podcasters. Creators earn recurring revenue from subscriptions while nurturing a community around their work.

 All about equity crowdfunding

Equity crowdfunding changed the game for both startups and investors. It opened the door for everyday investors to participate in equity funding. And entrepreneurs can raise millions at once from people around the globe.

LaunchBoom is an official partner of three of the largest equity crowdfunding platforms — StartEngine, WeFunder, and DealMaker. Check out the campaign we launched for Beanstox, which raised over $2,993,045 on StartEngine.

Modern day crowdfunding success stories

In 2016, Bubba Albrecht was working at Jackson Hole Airport as a baggage handler. In his off-hours, he was working with LaunchBoom on his first product, the Give’r 4-Season Gloves.

The campaign raised $270,942. We launched another product, the Give’r Frontier Mitten. It raised $198K within sixteen hours and went on to surpass $1M in funds. Today, you can find Give’r gloves in REI and Huckberry shelves across the nation.

Crowdfunding launched the Give’r brand, but more importantly, it rerouted Bubba’s life. Bubba’s success story is one among countless others. We’ve witnessed thousands of entrepreneurs achieve their dreams. It sounds cheesy, but it’s true — crowdfunding changes lives.

The future of crowdfunding

Crowdfunding has come a long way since gothic cathedrals and 18th century Irish farmers. With the growing prevalence of artificial intelligence, we anticipate rapid crowdfunding evolution in coming years.

We’ll most likely see these advances in the future of crowdfunding:

  • AI-powered prototypes. It’s easier and faster than ever before to brainstorm and design a prototype.
  • Photorealistic renderings. We’ve launched three campaigns that used 100% photorealistic renderings (although, be aware that photorealistic renderings are permitted on Indiegogo but not on Kickstarter). Increasingly, we’ll see AI-generated images on ads and campaign pages.
  • Better crowdfunding analytics. Using predictive modeling, creators can parse millions of historical data points to inform their campaign strategies and predict crowdfunding success.
  • Marketing automation and optimization. Marketing services are quickly adopting AI tools. Unbounce has AI tools for optimizing web traffic, writing smart copy, and designing higher-converting landing pages. Klaviyo uses AI to personalize email and SMS outreach.

The importance of crowdfunding in the modern economy

Crowdfunding is a billion-dollar industry, and it’s only projected to grow. In North America alone, crowdfunding generates $17.2 billion every year. It’s safe to say, crowdfunding makes serious waves in the modern economy.

The last ten years have been quite the journey. We’ve worked with thousands of product creators from 40 different countries. We’ve had incredibly big wins as well as our fair share of setbacks. But if there’s one thing we realized, it’s this: Crowdfunding stands at the forefront of modern entrepreneurship, and we don’t want to miss a thing.

How to know if crowdfunding is right for you?

Maybe you have an amazing product idea you’re itching to bring to life. Maybe your product is ready to launch, and you need a marketing strategy. Or maybe you’re like the rural Irish farmers, the bamboo artisans in Jobra, Marillion in the recording studio — on the brink of success, just waiting for the opportunity.

The time is now. Centuries of history have brought you to this moment. It’s never been this exciting and this timely to be a crowdfunder. If you’re wondering if crowdfunding is right for you, we want to hear about your product. Talk to an expert today. 


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