The concept of crowdfunding is a close cousin to the better-known term crowdsourcing: tapping into a mass of knowledge by using the Internet to find users of, say, Facebook or Yelp or Cats.com. From there, it’s a small evolution to using the Internet to garner money from farflung individuals, something that only really became possible with technology in the late 1990s to facilitate business transactions and to transfer money easily and safely, with websites like PayPal and Amazon and eBay.
In the past half-decade, the idea of using the Internet and crowds of otherwise unconnected people to raise money has steadily gained traction. Musicians, writers, and filmmakers use crowdfunding to persuade people to chip in a few dollars here and there to record albums, write books, or make films. Philanthropists have used the concept to generate interest and funding for orphans in third-world countries. Entrepreneurs have used it to raise money for new devices or video games. One couple used IndieGoGo to raise money for a medical procedure to help them get pregnant.
Websites have since sprouted like mushrooms across the Internet, with hundreds of new sites seeking to connect donors and philanthropists, investors and companies, or music lovers and musicians. IndieGoGo and its competitor KickStarter remain among the largest and most publicized endeavors. Underscoring the growth in investor interest in the crowdfunding industry, IndieGogo earlier this month received a $15 million injection of venture capital, the largest single investment in a crowdfunding enterprise.
IndieGoGo says it has hosted more than 100,000 campaigns, in one of 28 categories ranging from “transmedia” and “theater” to “food” and “animals.”