Possibilities of tokenization as a natural fit for the digital crowd?

OK, I have this thought or idea.

But first a question. Are ICO’s (initial coin offerings) actually crowdfunding? To answer this, we first have to examine the past.

A little history of Crowdfunding - at first principles.

1200’s - As far back as the thirteenth century high risk seafaring expeditions were funded through crowd pooling, in the hope of a large reward. This continued for centuries, in various way, culminating with the exploration age in Antarctica at the turn of the nineteenth/twentieth centuries. Although these expeditions were perhaps more vanity driven.

One of the first widely recognized examples of crowdfunding came in 18th century Ireland, when Anglo Irish author and cleric Jonathan Swift set up the Irish Loan Fund, to facilitate lending to low income but trustworthy families. This was a precursor to crowd lending or the peer to peer lending that we see today. Irish people of a similar vintage to myself will remember Jonathan’s Swift’s face from the old Irish ‘punt’.

Patronages from around this time could also be seen as early crowdfunding, most famously through Alexander Pope and Wolfgang Mozart. The former constructed a type of subscription model where advance purchases got his audience a guaranteed yearly volume, with their names published inside - much like modern day rewards based crowdfunding. Mozart also got his fans to contribute in advance to his three new concertos in the 1780’s.176 backers supported the tour and got a concert manuscript with his personal thanks for their trouble. A good investment in hindsight.

Joseph Pulitzer famously started a crowdfunding campaign in his newspaper The New York World in 1885, which raised $101,091 to help fund the construction of the statue of liberty. This was a tier based campaign, or what’d we’d now call a subscription model. The size of the replica statue you got depended on your donation amount. Anyhow, the top-up was needed to make the project a reality. The rest, as they say, is history.

By the time the twentieth century came around, it was starting to become apparent that crowdfunding was suitable for different types of projects, particularly in the entertainment industry. The Indian film Manthan is the first recorded as having been funded entirely by the crowd in 1976. That same year Dr Mohamad Yunus - the pioneer of microfinance launched a program in Bangladesh to provide banking opportunities to low income residents. Initially he loaned $27 to 42 women. Within 4 years the program had 30,000 members. the fund transfers into Grameen Bank, with 8 million borrowers - and 97% of money going to female-operated businesses.

Now, there are many more examples. In 1997 Marillon, a British post-punk band raised $60K through digital donations to save a tour of the US. This was a first of its kind at the lime.

“Inspired by the success of the campaign, the American producer Brian Camelio created ArtistShare in 2001. This was the first platform in the history of crowdfunding focused solely on musicians. Two years later, the jazz artist Maria Schneider won a Grammy Award for a record sponsored by her fans on ArtistShare. This stands as a milestone for crowdfunding: It was the first time a record won the Grammys without ever being sold in normal stores.”

Then things really turned digital. In 2005 Zopa, the first digital crowd-lending platform was launched in London, the founding team having come from Egg. And thus accelerates the democratization and decentralization of financial services and power. The main purpose of their company was to bring together people who had money to lend and people who needed to borrow it. Their model was successful throughout the years and brought them to obtain a banking license in 2016. But was this recognition or giving in?

Although the act of crowdfunding projects goes back centuries, the actual term is relatively new. In 2006 the American writer Michael Sullivan used the expression for the first time on the internet. The following year the Australian Small Scale Offerings Board introduced the first equity-based crowdfunding platform. This is a real turning point and the birth of equity crowdfunding. Soon, it arrived in Europe where Crowdcube and Seedrs are recognizable names, and eventually in the US when the JOBS act was introduced in 2012. Crowdcube and Seedrs tried to merge in 2020, but the move was vetoed because of monopoly concerns in The UK. Both were loss making and needed scale. The US based and VC backed Republic platform eventually purchased Seedrs for c, £1m, and touted Seedrs tech as the main reason, when I visited the Republic HQ in Manhattan last year.

The recession of 2008 got people thinking (an understatement) and, needs must. It led to the birth of rewards based crowdfunding as we know it today. Indiegogo and Kickstarter were born and grew rapidly, as new businesses saw this as a way to fund new projects and product launches. As I write this a notification just popped up in my LinkedIn from Everett Taylor that says Kickstarter has just passed the $8 billion raised mark.

Where is crowdfunding now? 

Well, it’s a booming ecosystem, all of its own. The global crowdfunding market was valued at USD 20.34 billion in 2023. The market size is expected to progress at a CAGR of 18.24% from 2024 to 2029 and be worth USD 55.58 billion by 2029 from (USD 24.05 billion in 2024).

How will it work, & the newsletter map 

In my humble opinion, it’s as a digital crowdfunding utility token, which can of course appreciate in value as well as offer its utility or use. Hence this newsletter. In this weekly newsletter I will share the journey to finding this perfect cross, while also discussing what we learnt strategically about rewards based crowdfunding, equity crowdfunding and tokenization over the last decade. And, at the end of it? Have a framework for a real and value-adding crowd-tokenization. Not a shiny new thing in sight… And the sky’s the limit. How can we bring this to the next level?

Step 1 - this is the plan - apologies for my illegible scribbles!

For now, thanks for reading, and please share with anyone you think may be interested. You’re in at the start - ground level, as this is very much going to be a team effort...

Until next Wednesday, have a great week. And feel free to email with any content / suggestions - [email protected]

Derek, CEO and Founder of CRUA.