A history of crowdfunding

By Matthew Okeefe

Crowdfunding has fast evolved into one of those generational ideas, a thunderclap that promises to change capitalism indefinitely. While we regard it as a fairly new method for raising funds the truth is that it has been around a lot longer than we think, with many legendary projects being financed through the methods of an investment crowd.

In this piece we aim to give a clear picture of how the practice of crowdfunding has been ingrained within the financial world since the 18th century, celebrating both the roots and the potential of crowdfunding.

The Statue of Liberty

Unknowingly the Statue of Liberty is America’s crowdfunding pioneer, posing an incredible story that most are unaware of. Shipped over from France the statue was a diplomatic gift from the French to America. However, when preparation for the delivery began the US realised that a granite plinth for the statue was required, costing around $6.3m (£4.1m in today’s money) (Davies, 2014).

Facing difficulty raising the funds the US posted the following advert in the newspaper The New York World, asking the residents of the city to donate and help assemble the statue. Attracting the attention of children, businessmen, street cleaners and politicians the money was raised with the majority donating less than a dollar each (Davies, 2014).


BBC Journalist Rodrigo Davies comments on the breakthrough of the crowd:

‘The campaign eventually raised money from more than 160,000 donors’

‘It was a triumphant rescue effort: in just five months The World raised $101,091 – enough to cover the last $100,000 to complete the pedestal and have money leftover for a gift for the sculptor’ (Davies, 2014).

‘In June 1885 the infamous financier and property owner Erasmus Wiman, commonly known as The Duke of Staten Island, invited the newspaper’s Managing Editor, Joseph Cockerill, to discuss a secret development on Staten Island “which, after the Bartholdi Statue is completed, would be a glorious a mission for The World”.’ (Davies, 2014).

While there is no evidence that the editor accepted the offer of a meeting it does suggest that a property crowdfunding project may have been in the pipeline. Although, given that Wiman was later jailed for fraud it was probably wise not to have attended (Davies, 20141).

Having nearly lost the statue to neighbouring cities, including Boston, San Francisco and Philadelphia it seems that crowdfunding saved the day, seeing the statute play an integral role in the culture of the US (Davies, 2014).

Peer-to-peer poetry

untitledCrowdfunded started and has continued to support many art forms, with promising creators of literature, film and music relying on a community of investors to share such talents. Where we are more preoccupied with moving image nowadays crowdfunding arguably came for humble beginnings, with authors pitching to a crowd back in the 1700’s (Open.edu, 2016).

Alexander Pope set out on a journey to translate Greek poetry into English in 1713, asking for subscribers to pledge two gold guineas each to support his work. In return Pope promised to include an acknowledgment of anyone who pledged; a clear example of the potential of crowdfunding (http://top-web.us/pre-history-of-crowdfunding-in-the-1700-alexander-pope-mozart-beethoven-and-pulitzer/).

A few years later Mozart attempted something very similar. Displaying a desperation to perform three newly-composed piano concertos in a Viennese concert hall he knew he needed financial backing. After testing many methods, he decided to publish an invitation to prospective backers, offering manuscripts to those who pledged (http://top-web.us/pre-history-of-crowdfunding-in-the-1700-alexander-pope-mozart-beethoven-and-pulitzer/).

Far from the Madding Crowdfund

william-shakespeare-playrightCrowdfunding in 18th Century art was much focused on William Shakespeare, with many historians and enthusiasts looking for funds to aid their research projects. One of the most famous crowdfunding Shakespeare tales was penned by Lewis Theobald (open,edu).

Lewis Theobald was a British textual editor and author, a landmark figure in the history of Shakespearean editing.
In 1727 Theobald needed money to commission a book entitled Shakespeare Restor’d, putting on a benefit show in order to crowdfund the money he needed for its production (open,edu).

‘In effect, Lewis Theobald’s work on Shakespeare was like a piece of 18th Century crowd-funding, as a theatre company put on a benefit show’ (open.edu2) confirms educational site Open Learn.

Wanting to clear up the shoddy work of his editing predecessors such as Alexander Pope, Theobald relied on heavy marketing on the project, one that ‘could have fitted comfortably in social media age’ (open,edu).

Crowdfunding start-ups

With the application of sophisticated technology, peer-to-peer lending is able to be used and marketed to the masses, seeing crowdfunding platforms enter an array of industries.

Still working with the same premise as Theobald, Pope, Mozart and The New York World crowdfunding has in modern times been applied to the world of business, being a way for business start-ups to gain the backing they need to perform. Seedrs.com is one of the most popular platforms within the start-up crowdfunding space.

Seedrs_Crowdfunding_Logo_2013.jpgGiving individuals of the crowd shares in the business in exchange for funding, such agreements have evolved into investment opportunities, seeing single investors spread the risk factor over various different projects and businesses.

Virgin.com writer Natalie Clarkson boasts confidence in the longevity of this investment model.
‘As it stands, there have been 8.7 million individuals who have backed a project’.

‘2.6 million of those have backed more than one project so no matter what the critics say, it’s hard to imagine a day when crowdfunding loses its popularity, marketing tool or not’ (Clarkson, 2015).

Directly fed from the financial crisis of 2008 and people’s disillusion of the traditional banking system, such alterative means are reading for mass adoption.

Simplifying property investment

From the success of start-up accelerators such a Seedrs the property market has sat up, eager to adopt this revolutionary investment model. With so many changes to the property investment market, including mortgage rates and taxes, landlords and other types of investors are looking for new ways to diversify their portfolio and we think investing through a crowd is the perfect solution.

Sharing the risks amongst fellow investors, as well as avoiding the demands of property management, we think investing in property through a crowd simply makes sense.

According to George Grigg, Co-Founder of ShareProperty, the potential of property crowdfunding will be directly met from education.

‘According to residential lettings company, Savills, the total value of UK residential property is estimated at over 6 trillion pounds (http://www.savills.co.uk/_news/article/72418/198296-0/1/2016/total-value-of-uk-homes-passes-%C2%A36-trillion-mark).In 2015, the total value of equity crowdfunding property transactions was £87million as stated in a recent report by Nesta.org.uk (https://www.nesta.org.uk/sites/default/files/pushing_boundaries_0.pdf). So I think it’s fair to say there may be some upside growth potential in the market’.

‘This will be driven by wider awareness, greater market acceptance and adoption of private platforms, run by sensible, experienced professionals looking to move away from dying traditional industries but have great skillsets and contacts’.

If you are interested in property investment opportunities, then register with ShareProperty today and enjoy regular property updates.



**Please note that investing in early stage businesses involves risks, including loss of capital, illiquidity (the inability to sell assets quickly or without substantial loss in value) and lack of dividends and should only be done as part of a diversified portfolio. Your capital is at risk if you invest. Tax treatment depends on the individual circumstances and may be subject to change in the future.

1. Davies, R. (2014) The Statue of Liberty and America’s crowdfunding pioneer. Available at: http://www.bbc.co.uk/news/magazine-21932675
2. Open.edu (2016) Collecting Shakespeare: Crowd funding and rediscovered plays. Available at: http://www.open.edu/openlearn/history-the-arts/culture/literature-and-creative-writing/literature/collecting-shakespeare-crowd-funding-and-rediscovered-plays
3. Clarkson, N. (2015) A brief history of crowdfunding. Available at: https://www.virgin.com/entrepreneur/a-brief-history-of-crowdfunding

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