Crowdfunding is a form of Crowdsourcing, applied to finance. Instead of seeking finance from institutional sources, the supporting community is asked to support the project in a distributed fashion.

(Most of the examples below can also be called "collective ex-ante fundraising".)

Definition

From the Wikipedia at http://en.wikipedia.org/wiki/Crowdfunding [1]

"Crowdfunding describes the collective cooperation, attention and trust by people who network and pool their money together, usually via the Internet, in order to support efforts initiated by other people or organizations."

Most examples below are from http://get-paid-to-ppc.blogspot.com/2007/01/types-of-crowdfunded-projects.html

Typology

Examples: Music

Sellaband

Sellaband has the following model:

"The site basically gives you a MySpace type page to exhibit your mp3s, but instead of friends, you get ‘believers.’ These disciples of your rock scripture invest in your music at $10 increments until you’ve raised $50,000. Then, the magic happens at the studio, your faithful get a copy of your album, and the songs are posted online for free. For every download, you and your financiers, the original ‘believers,’ share in ad revenue. (More details here.)

By deferring the cost and talent of scouting to a large population of music lovers, SellaBand puts powerful marketing and production tools into the hands of those with a personal interest in the music. Potentially, this is a perfect service for bedroom musicians who think they have the next big thing but have no exposure. It’s one of several examples of crowdfunding." (http://newassignment.net/blog/keith_axline/dec2006/06/music_makes_a_ca)

I Am Verity

i am verity: "Fans can become a "future owner today" by helping to raise $80,000 for recording costs and charity benefits. In essence, the artist is asking people to buy an album before it exists... so that it can exist. Also, 5.3% of money earned will be used to help others succeed (vague). Another 5.3% of everything earned goes to "People Opposing Woman Abuse's" work in South Africa. Once the target of 5000 albums is sold, The hope is to increase the percentage put towards these charities and make a difference in South Africa." [2]

More Examples

ArtistShare Slice the Pie

Examples: Cinema, Video, Vlogging

A Swarm Of Angels

A Swarm Of Angels is a peer funded film project witht the following model:

"A Swarm of Angels is about making a £1 million movie and giving it away to one million people in one year. By using the Internet to gather together 50,000 people willing to pay £25 to join an exclusive global online community–The Swarm–the project’s ambition is to make the world’s first Internet-funded, crewed and distributed feature film."

Have Money Will Vlog

Have Money Will Vlog "is a project that involves a group of volunteers that act as advocates for vlog proposals. The advocates promote projects they believe in to potential donors, whether they are friends and family or reaching out to those who subscribe to their blogs and related mailing lists etc. It's a very intimate affair that relies on Crowdfunding to reach the pledge drive's goals." [3]

Fundavlog

"fundavlog is an experimental project that will attempt to sustain and/or incubate videoblog related projects and events by growing a Crowdfunded Network offering configurable 'payment pages' with simple funding functionality. Reciprocity and Transparency are the core basis in order to build a trusted attention network of people who are interested in the videoblog culture. Users deposit money into the fundavlog bank which they then can use to fund various types of entries submited by other users." [4]

Examples: Philanthropy, Activism

Fundable

fundable: "A service allowing for the creation and management of fundable "group action" pages where pledges can be accepted. If a campaign does not reach its goal within a set time (14 or 25 days), then all pledges are negated and no money distributed." [5]

First Giving

First Giving: "A service that allows fundraisers to create online person-to-person fundraising pages for any US non-profit. The funds are directly transferred to the non-profit which differentiates firstgiving from other services." [6]

Chip In

Chip In: "Another service for creating pledge drives and campaigns to raise and distribute funds. Similar to fundable.org but the main difference is that chipin.com does not currently require a time limit to reach the target amount." [7]

Robin Hood Fund

"The Robinhood Fund is committed to fulfill as many everyday wishes for as many everyday people as possible. Anyone can submit a wish, and through the wisdom of crowds, wishes are fulfilled. Wishes are divided into two categories with one wish from heartfelt need and one wish from simple greed getting fulfilled. "The Robinhood Fund is different because we allow the crowd – not elite individuals such as a board – to decide which wishes should be granted." [8]

Act Blue

"ActBlue is a Federal PAC that enables anyone — individuals, local groups, and national organizations — to fundraise for the Democratic candidates of their choice. Previously, only the most well-funded and technologically-savvy groups have employed these powerful fundraising methods. But with ActBlue, groups and individuals need only choose their candidates and make their solicitations." [9]

Examples: Business

Laragh Finance: "A company that raises funding for businesses using the crowd funding concept, private placements are no longer only accessible for high net worth individuals and big institutions. A large group of small investors can together come up with the total capital a company need to execute its business plans." [10]

Crowdcube.com is the worlds first crowdfunding platform enabling startup companies to raise funding by offering real equity. Uniquely, Investors can invest very small amounts of money (minimum £10) allowing the average Joe to build their own investment portfolio. See also: Crowdfunding definition, examples and latest news

PeerBackers peerbackers is a new way to fund entrepreneurs. It is an online funding platform that allows business owners to raise capital from their “peers”—in small increments—in exchange for tangible rewards to those who contribute.

More Information

More information in the Wikipedia article at http://en.wikipedia.org/wiki/Crowdfunding
Overview article at http://get-paid-to-ppc.blogspot.com/2007/01/types-of-crowdfunded-projects.html
Bands funded by their fans

Crowdfunding

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