Crowdfunding has a long history with more than one root. Books have been crowdfunded for centuries: Authors and publishers would advertise book projects inpraenumeration or subscription schemes. The book would be written and published if enough subscribers signaled their readiness to buy the book once it was out. The subscription business model is not exactly crowdfunding since the actual flow of money will only begin with the arrival of the product. The list of subscribers has, on the other hand, the power to create the necessary confidence among investors that is needed to risk the publication.
War bonds are theoretically a form of crowdfunding military conflicts. London's mercantile community saved the Bank of England in the 1730s when customers demanded their pounds to be converted into gold - they supported the currency until confidence in the pound was restored and thus crowdfunded their own money.
A clearer case of modern crowdfunding is Auguste Comte's scheme to issue notes for the public support of his further work as a philosopher. The "Premiere Circulaire Annuelle adressée par l’auteur du Systeme de Philosophie Positive" was published on 14 March 1850 and several of these notes, blank and with sums have survived.
The cooperative movement of the 19th and 20th centuries is a broader precursor. It generated collective groups, such as community or interest-based groups, pooling subscribed funds to develop new concepts, products, and means of distribution and production, particularly in rural areas of Western Europe and North America. In 1885, when government sources failed to provide funding to build a monumental base for the Statue of Liberty, a newspaper-led campaign attracted small donations from 160,000 donors.
Modern crowdfunding is a new phenomenon mostly with its use of social medias. It first gained popular and mainstream use here in arts and music communities.
The first instance of crowdfunding was in 1997, when fans underwrote an entire U.S. tour for the British rock group Marillion, raising US$60,000 in donations by means of a fan-based Internet campaign. The idea was conceived and managed by fans without any involvement from the band, although Marillion themselves used this method successfully to fund the recording and marketing of their 2001 albumAnoraknophobia, the first crowdfunded recording. They continued to do so with subsequent albums Marbles (2004), Happiness is the Road (2008), and Sounds That Can't Be Made (2012).
In the film industry, independent writer/director Mark Tapio Kines designed a website in 1997 for his then-unfinished first feature film Foreign Correspondents. By early 1999, he had raised more than US$125,000 on the Internet from at least 25 fans, providing him with the funds to complete his film.
In 2002 the "Free Blender" campaign was an early software crowdfunding precursor. The campaign aimed for open-sourcing the Blender raytracer software by collecting $100,000 from the community while offering additional benefits for donating members.
Crowdfunding gained traction after the launch of ArtistShare, in 2003. Following ArtistShare, more crowdfunding sites started to appear on the web such as IndieGoGo (2008), Kickstarter (2009) andMicroventures (2010). However, Sellaband, started in 2006 as a music-focused platform, initially controlled the crowdfunding market. Research suggests that this can be contributed to creators and funders, who perceive the platform to be more valuable when there are more members. Later, Kickstarter gained popularity for its wide-ranging focus. Both platforms prohibit equity funding. Though Sellaband offered revenue sharing, a type of equity crowdfunding, for three years after the platform’s founding. It was later controlled over by a German company and heightened security restrictions.
The phenomenon of crowdfunding is older than the term "crowdfunding." The earliest recorded use of the word was by Michael Sullivan in fundavlog in August 2006.
