Angel Investing: The Gust Guide to Making Money and Having Fun Investing in Startups

20

Crowdfunding and the Global Revolution

Angel Investing for Everyone

IN 1884, THE PEOPLE of France donated the Statue of Liberty to the United States. It was a gift of the heart, but it came with a condition: the United States was required to fund construction of the pedestal on which the statue would stand. When the U.S. Congress and New York State declined to allocate money for the project, newspaper publisher Joseph Pulitzer started a campaign that ultimately raised over $100,000 from more than 120,000 supporters, with 80 percent of the total being raised in sums of less than one dollar.

This was the first major crowdfunding campaign. It would take another 120 years and the emergence of the Internet before the concept of raising money from many small donors hit the mainstream. You've probably heard about crowdfunding in connection with some of its best-known online platforms—sites like Kickstarter, IndieGoGo, RocketHub, ArtistShare, and Sellaband—and may have wondered whether this approach could be used to fund startup companies. Under the crowdfunding model, supporters of a project contribute funds to support something they believe in, and receive various levels of rewards or perks in exchange.

The key thing to understand here is that in “traditional” online crowdfunding, as it has existed in the United States from 2003 until 2014, supporters are not in any way, shape or form purchasing ownership in the company or project, nor will they receive any benefit from the success ...